<PAGE> 1
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): May 17, 1999
FPA Medical Management, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-24276 33-0604264
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5835 Blue Lagoon Drive
Miami, FL 33126-2017
(Address of principal executive offices) (Zip Code)
(305) 477-4372
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
As previously reported on a Current Report on Form 8-K, on July 19,
1998 and various dates thereafter through August 7, 1998, the Registrant and
various of its subsidiaries and affiliates (collectively, the "Debtors") filed
for protection under Chapter 11 in the United States District Court for the
District of Delaware (the "Bankruptcy Court"). The cases have been consolidated
for the purpose of joint administration and have been assigned to Chief United
States Bankruptcy Judge Peter J. Walsh. The consolidated caption is: In re FPA
Medical Management, Inc., et al. Debtors, Case Nos. 98-1596 through 98-1685.
On May 17, 1999, the Debtors filed with the United States Bankruptcy
Court for the District of Delaware their monthly operating report for the period
from April 5, 1999 through April 30, 1999 (the "MOR"), which is attached hereto
as Exhibit 99.1.(1)
On May 26, 1999, the Debtors' Modified Second Amended Joint Plan of
Reorganization (the "Plan") was confirmed by the Bankruptcy Court. The Plan,
which provides for the sale of substantially all of the registrant's operations
in transactions valued at approximately $108.2 million, garnered the support of
the Debtors' major creditor constituencies, including the debtor-in-possession
("DIP") and prepetition lenders, the Debtors' Official Committee of Unsecured
Creditors and the registrant's major payors, Humana, Prudential and Pacificare.
Consummation of the Plan is expected to occur in June 1999 (the "Effective
Date").
The Plan includes and affects the registrant and 98 of its
affiliated debtor entities. Two of the Debtors' affiliates, Gotham Mid-Town
Management, Inc. and Virginia Medical Associates, P.C. were excluded from the
Plan and continue as Chapter 11 debtors-in-possession pending further order of
the Bankruptcy Court.
Under the Plan: the operations of Sterling Healthcare Group, Inc., a
wholly-owned FPA subsidiary, will be acquired by a newly formed subsidiary of
Coastal Physician Group, Inc. ("Coastal"); the clinical operations in Kansas
City, San Antonio and the State of Florida will be acquired by Humana Inc.,
which is currently the registrant's largest payor; and the clinical operations
in Charlotte, North Carolina and Atlanta will be acquired by Stoneybrook
Capital, an entity owned by Steven M. Scott, M.D., Chairman and Chief Executive
Officer of Coastal.
In the ruling approving the Plan, the Bankruptcy Court authorized
the Debtors, Humana and Stoneybrook to close the sale of the managed care
businesses on June 1, 1999, prior to the consummation of the Plan.
Administrative costs incurred on and after June 1, 1999 are the responsibility
of the purchasers.
In addition to the sales transactions, the Plan provides for the
establishment and funding of a Creditors Trust for the benefit of unsecured
creditors. Under the terms of the Plan, certain assets and claims of the Debtors
have been assigned to the Creditors Trust. The Trust is administered by the
Trustee and three-member Advisory Board selected by the Unsecured Creditors
Committee.
On the Effective Date, 98 of the registrant's subsidiaries and
affiliates will be merged into Reorganized FPA which will be owned by the
prepetition lenders who will receive 100% of the new common stock to be issued
under the Plan. Assets remaining after the sales to Coastal, Stoneybrook and
Humana, and after distributions to the Creditors Trust, will remain in
Reorganized FPA, which will be operated by the FPA Plan Administrator named
under the Plan. The DIP lenders will be paid in full and the prepetition lenders
will receive a $4,000,000 initial distribution on the Effective Date. In
addition to the initial distribution, the prepetition lenders will receive
supplemental funds collected by the FPA Plan Administrator after payment of
allowed administrative expenses of the reorganization.
- ----------
(1) The attachments and exhibits referenced in the MOR are not attached as
part of Exhibit 99.1, but are available at the Office of the United States
Trustee and the Bankruptcy Court. In addition, the Registrant agrees that
it will furnish a copy of any omitted schedule or similar attachment to
the Commission upon its request.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Monthly Operating Report for the period from April 5,
1999 through April 30, 1999.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
FPA MEDICAL MANAGEMENT, INC.
By: /s/ Stephen J. Dresnick
------------------------------------
Date: June 1, 1999 Stephen J. Dresnick
Chairman and Chief Executive Officer
3
<PAGE> 4
EXHIBIT INDEX
Number Exhibit
- ------ -------
99.1 Monthly Operating Report for the period from April 5, 1999 through
April 30, 1999.
4
<PAGE> 1
EXHIBIT 99.1
Debtor: FPA MEDICAL MANAGEMENT, INC.
Case Number: 98-01596PJW THROUGH 98-01685PJW
Notes to Monthly Operating Report for the period April 5, 1999 through April 30,
1999. "Required Attachments":
1. Depository Tax Receipts for payroll tax deposits into tax trust accounts are
included for the month of April.
2. Copies of most of the Debtors' bank statements for the month of April are
attached; copies of the balance of the April statements not yet received from
the Banks and/or Debtors will be forwarded upon receipt.
3. The Debtors' most recently filed Income Tax Return for 1997 is included in
the filing for the period November 30, 1998 through January 1, 1999 with the
Office of the United States Trustee. The 1996 Tax Return was submitted in a
prior period (July 19-August 28, 1998) filing.
4. The Debtors' most recent Annual Financial Statements prepared by Accountant
were included in a prior period (July 19-August 28, 1998) filing with the Office
of the United States Trustee.
5. The Debtor's most recent unaudited financial statements for each of the core
business subsidiaries for the month of April, 1999, are included in this Monthly
Operating Report.
<PAGE> 2
FPA MEDICAL MANAGEMENT, INC.
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
------------------------------------------------
Projected (1) Actual (1) Difference
------------------------------------------------
A B C=B-A
------------------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ 1,214,529 $ 1,214,529 --
Cash Receipts:
Fee For Service Billings 13,705,000 13,215,017 (489,983)
Claims & Capitation 7,741,763 7,201,869 (539,894)
Reimbursement -- 21,343 21,343
Medicare & Collections 1,800,000 1,450,868 (349,132)
------------------------------------------------
TOTAL CASH RECEIPTS $ 23,246,763 $ 21,889,097 (1,357,666)
Less: Cash Disbursements:
Employee & Physician Payroll 17,365,000 17,578,305 213,305
Catch-up payments to Doctors -- -- --
Insurance 1,684,000 2,817,064 1,133,064
Claims & Capitation 1,100,000 302,383 (797,617)
Patient Refunds 100,000 278,270 178,270
Rent 1,020,000 1,073,248 53,248
Utilities 490,500 281,633 (208,867)
Bank Lock-Box Account Fees -- -- --
Medical Supplies 597,600 165,524 (432,076)
Other 3,042,189 2,360,134 (682,055)
------------------------------------------------
Total Cash Disbursements $ 25,399,289 $ 24,856,561 (542,728)
Net Cash Flow (2,152,526) (2,967,464) (814,938)
Financing Charges (413,446) (411,183) 2,263
Retention Costs -- -- --
Professional Fee Retainers -- -- --
Professional Fees (2,500,000) (1,661,282) 838,718
Restructuring Expenses (125,000) (425,101) (300,101)
Repayment to HPI -- 630,532 630,532
Capital Expenditures -- -- --
A/R Turned Over from Collection 640,000 50,739 (589,261)
Sale of Orange Coast -- -- --
Sale of Axminster -- -- --
Sale of Other Assets -- 45,500 45,500
DIP Loan Repayment -- -- --
DIP Loan Proceeds -- -- --
DIP Loan Borrowing 5,420,000 5,000,000 (420,000)
Orange Coast Transaction Fees -- -- --
Orange Coast Post-Sale Disbursements (420,000) (27,444) 392,556
- -----------------------------------------------------------------------------------------
Ending Cash Balance $ 1,663,557 $ 1,448,826 (214,731)
- -----------------------------------------------------------------------------------------
</TABLE>
1) The projected data reflected herein is based upon the Budgets submitted to
the Court in the DIP Loan Agreement dated July 20, 1998, and as amended from
time to time thereafter. The actual data reflected herein is based upon the
actual data reported.
<PAGE> 3
STERLING HEALTHCARE GROUP, INC.
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
------------------------------------------------
Projected Actual Difference
------------------------------------------------
A B C=B-A
------------------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ 1,717,654 $ 1,717,654 --
Cash Receipts:
Fee For Service Billings 12,000,000 11,207,603 (792,397)
Claims & Capitation -- -- --
Reimbursement -- -- --
Medicare & Collections 1,800,000 1,450,868 (349,132)
------------------------------------------------
TOTAL CASH RECEIPTS $ 13,800,000 $ 12,658,471 (1,141,529)
Less: Cash Disbursements:
Employee & Physician Payroll 11,075,000 11,229,265 154,265
Catch-up payments to Doctors -- -- --
Insurance 1,400,000 1,668,494 268,494
Claims & Capitation -- -- --
Patient Refunds 100,000 276,940 176,940
Rent 130,000 102,897 (27,103)
Utilities 67,000 14,785 (52,215)
Bank Lock Box -- -- --
Medical Supply 1,000 -- (1,000)
Other 2,150,000 1,266,071 (883,929)
------------------------------------------------
Total Cash Disbursements $ 14,923,000 $ 14,558,452 (364,548)
Net Cash Flow (1,123,000) (1,899,981) (776,981)
Intercompany Transfers -- 1,273,895 1,273,895
ENDING CASH BALANCE $ 594,655 $ 1,091,568 496,913
------------------------------------------------
</TABLE>
<PAGE> 4
FLORIDA (CLINICS & HUMANA)
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------
Projected Actual Difference
---------------------------------------------
A B C=B-A
---------------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ -- $ -- $ --
Cash Receipts:
Fee For Service Billings 800,000 967,131 167,131
Claims & Capitation 1,500,000 1,487,838 (12,162)
Reimbursement -- -- --
Medicare & Collections -- -- --
---------------------------------------------
TOTAL CASH RECEIPTS $ 2,300,000 $ 2,454,969 154,969
Less: Cash Disbursements:
Employee & Physician Payroll 2,100,000 1,989,423 (110,577)
Catch-up payments to Doctors -- -- --
Insurance 75,000 5,805 (69,195)
Claims & Capitation -- -- --
Patient Refunds -- -- --
Rent 280,000 300,273 20,273
Utilities 290,000 100,127 (189,873)
Bank Lock Box -- -- --
Medical Supply 200,000 59,002 (140,998)
Other 230,000 289,510 59,510
---------------------------------------------
Total Cash Disbursements $ 3,175,000 $ 2,744,140 (430,860)
Net Cash Flow (875,000) (289,171) 585,829
Intercompany Transfers -- 289,171 289,171
ENDING CASH BALANCE $ (875,000) $ -- $ 875,000
---------------------------------------------
</TABLE>
<PAGE> 5
KANSAS CITY
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------
Projected Actual Difference
---------------------------------------------
A B C=B-A
----------- ----------- -----------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ -- $ -- --
Cash Receipts:
Fee For Service Billings 160,000 115,907 (44,093)
Claims & Capitation 2,700,000 2,473,203 (226,797)
Reimbursement -- -- --
Medicare & Collections -- -- --
---------------------------------------------
TOTAL CASH RECEIPTS $ 2,860,000 $ 2,589,110 (270,890)
Less: Cash Disbursements:
Employee & Physician Payroll 1,480,000 1,486,481 6,481
Catch-up payments to Doctors -- -- --
Insurance -- 13,295 13,295
Claims & Capitation -- -- --
Patient Refunds -- -- --
Rent 235,000 249,359 14,359
Utilities 25,000 68,160 43,160
Bank Lock Box -- -- --
Medical Supply 35,000 31,821 (3,179)
Other 110,000 120,410 10,410
---------------------------------------------
Total Cash Disbursements $ 1,885,000 $ 1,969,526 84,526
Net Cash Flow 975,000 619,584 (355,416)
Intercompany Transfers -- (619,584) (619,584)
ENDING CASH BALANCE $ 975,000 $ -- (975,000)
---------------------------------------------
</TABLE>
<PAGE> 6
MERIDIAN
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------
Projected Actual Difference
---------------------------------------------
A B C=B-A
---------------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ (520,271) $ (520,271) --
Cash Receipts:
Fee For Service Billings 465,000 482,089 17,089
Claims & Capitation 2,596,763 2,708,904 112,141
Reimbursement -- -- --
Medicare & Collections -- -- --
---------------------------------------------
TOTAL CASH RECEIPTS $ 3,061,763 $ 3,190,993 129,230
Less: Cash Disbursements:
Employee & Physician Payroll 1,410,000 1,440,954 30,954
Catch-up payments to Doctors -- -- --
Insurance 135,000 316,308 181,308
Claims & Capitation 930,000 142,130 (787,870)
Patient Refunds -- 1,320 1,320
Rent 250,000 252,722 2,722
Utilities 60,000 56,760 (3,240)
Bank Lock Box -- -- --
Medical Supply 300,000 48,390 (251,610)
Other 280,000 149,188 (130,812)
---------------------------------------------
Total Cash Disbursements $ 3,365,000 $ 2,407,772 (957,228)
Net Cash Flow (303,237) 783,221 1,086,458
Intercompany Transfers -- (13,051) (13,051)
ENDING CASH BALANCE $ (823,508) $ 249,899 1,073,407
---------------------------------------------
</TABLE>
<PAGE> 7
NORTH CAROLINA
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------
Projected Actual Difference
---------------------------------------
A B C=B-A
---------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ -- $ -- --
Cash Receipts:
Fee For Service Billings 120,000 78,844 (41,156)
Claims & Capitation 200,000 114,816 (85,184)
Reimbursement -- -- --
Medicare & Collections -- -- --
---------------------------------------
TOTAL CASH RECEIPTS $ 320,000 $ 193,660 (126,340)
Less: Cash Disbursements:
Employee & Physician Payroll 360,000 292,640 (67,360)
Catch-up payments to Doctors -- -- --
Insurance 15,000 -- (15,000)
Claims & Capitation -- -- --
Patient Refunds -- -- --
Rent 35,000 69,195 34,195
Utilities 22,000 10,167 (11,833)
Bank Lock Box -- -- --
Medical Supply 10,000 -- (10,000)
Other 100,000 15,619 (84,381)
---------------------------------------
Total Cash Disbursements $ 542,000 $ 387,621 (154,379)
Net Cash Flow (222,000) (193,961) 28,039
Intercompany Transfers -- 193,961 193,961
ENDING CASH BALANCE $(222,000) $ -- $ 222,000
---------------------------------------
</TABLE>
<PAGE> 8
SAN ANTONIO (GONZABA)
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------
Projected Actual Difference
---------------------------------------
A B C=B-A
---------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ -- $ -- --
Cash Receipts:
Fee For Service Billings 80,000 78,953 (1,047)
Claims & Capitation 600,000 314,790 (285,210)
Reimbursement -- -- --
Medicare & Collections -- -- --
---------------------------------------
TOTAL CASH RECEIPTS $ 680,000 $ 393,743 (286,257)
Less: Cash Disbursements:
Employee & Physician Payroll 470,000 527,544 57,544
Catch-up payments to Doctors -- -- --
Insurance 20,000 13,723 (6,277)
Claims & Capitation -- 4,467 4,467
Patient Refunds -- 10 10
Rent 80,000 79,009 (991)
Utilities 20,000 19,384 (616)
Bank Lock Box -- -- --
Medical Supply 50,000 26,311 (23,689)
Other 50,000 36,544 (13,456)
---------------------------------------
Total Cash Disbursements $ 690,000 $ 706,992 16,992
Net Cash Flow (10,000) (313,249) (303,249)
Intercompany Transfers -- 313,249 313,249
ENDING CASH BALANCE $ (10,000) $ -- 10,000
---------------------------------------
</TABLE>
<PAGE> 9
HEALTH PARTNERS, INC
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------
Projected Actual Difference
---------------------------------------------
A B C=B-A
----------- ----------- -----------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ 1,057,586 $ 998,324 $ (59,262)
Cash Receipts:
Fee For Service Billings 500,000 313,925 (186,075)
Claims & Capitation 240,000 -- (240,000)
Reimbursement -- -- --
Medicare & Collections -- -- --
---------------------------------------------
TOTAL CASH RECEIPTS $ 740,000 $ 313,925 (426,075)
Less: Cash Disbursements:
Employee & Physician Payroll 190,000 249,450 $ 59,450
Catch-up payments to Doctors -- -- $ --
Insurance 20,000 600 $ (19,400)
Claims & Capitation 200,000 -- $ (200,000)
Patient Refunds 4,000 -- $ (4,000)
Rent 20,000 58,740 $ 38,740
Utilities 36,000 7,690 $ (28,310)
Bank Lock Box Account Fees -- --
Medical Supply 60,000 -- $ (60,000)
Other 375,000 326,370 $ (48,630)
---------------------------------------------
Total Cash Disbursements $ 905,000 $ 642,850 $ (262,150)
Net Cash Flow (165,000) (328,925) $ (163,925)
Intercompany Transfers -- (630,532) $ (630,532)
ENDING CASH BALANCE $ 892,586 $ 38,867 $ (853,719)
---------------------------------------------
</TABLE>
NOTE: Health Partners Inc. is reported for cash flow purposes as a stand alone
entity. These transactions are not included as a part of the FPA Medical
Management, Inc. roll-up.
<PAGE> 10
CORPORATE
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------
Projected Actual Difference
---------------------------------------------
A B C=B-A
----------- ----------- -----------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ -- $ -- --
Cash Receipts:
Fee For Service Billings -- 175,308 175,308
Claims & Capitation -- -- --
Reimbursement -- 21,343 21,343
Medicare & Collections -- -- --
---------------------------------------------
TOTAL CASH RECEIPTS $ -- $ 196,651 196,651
Less: Cash Disbursements:
Employee & Physician Payroll 438,000 581,643 143,643
Catch-up payments to Doctors -- -- --
Insurance 39,000 798,088 759,088
Claims & Capitation -- -- --
Patient Refunds -- -- --
Rent 10,000 19,793 9,793
Utilities 6,500 12,250 5,750
Bank Lock Box -- -- --
Medical Supply -- -- --
Other 75,000 461,240 386,240
---------------------------------------------
Total Cash Disbursements $ 568,500 $ 1,873,014 1,304,514
Net Cash Flow (568,500) (1,676,363) (1,107,863)
Intercompany Transfers -- 1,676,363 1,676,363
ENDING CASH BALANCE $ (568,500) $ -- 568,500
---------------------------------------------
</TABLE>
<PAGE> 11
CLOSURES
DIP Budget
DIP Projected vs. Actual Cash Flows
April 5, 1999 through April 30, 1999
<TABLE>
<CAPTION>
--------------------------------------
Projected Actual Difference
--------------------------------------
A B C=B-A
--------------------------------------
<S> <C> <C> <C>
INITIAL CASH BALANCE $ -- $ 17,146 17,146
Cash Receipts:
Fee For Service Billings 80,000 109,182 29,182
Claims & Capitation 145,000 102,318 (42,682)
Reimbursement -- -- --
Medicare & Collections -- -- --
--------------------------------------
TOTAL CASH RECEIPTS $ 225,000 $ 211,500 (13,500)
Less: Cash Disbursements:
Employee & Physician Payroll 32,000 30,355 (1,645)
Catch-up payments to Doctors -- -- --
Insurance -- 1,351 1,351
Claims & Capitation 170,000 155,786 (14,214)
Patient Refunds -- -- --
Rent -- -- --
Utilities -- -- --
Bank Lock Box -- -- --
Medical Supply 1,600 -- (1,600)
Other 47,189 21,552 (25,637)
--------------------------------------
Total Cash Disbursements $ 250,789 $ 209,044 (41,745)
Net Cash Flow (25,789) 2,456 28,245
Intercompany Transfers -- 87,757 87,757
ENDING CASH BALANCE $ (25,789) $ 107,359 133,148
--------------------------------------
</TABLE>
