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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date earliest event reported) July 31, 2000
CORAM HEALTHCARE CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 1-11343 33-0615337
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1125 Seventeenth Street, Suite 2100, Denver, Colorado 80202
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (303) 292-4973
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(Former name or former address, if changed since last report)
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ITEM 2. DISPOSITION OF ASSETS
On July 31, 2000, Coram Healthcare Corporation ("Coram" or the
"company") completed the sale of substantially all of the assets and assignment
of certain liabilities related to its Coram Prescription Services business
("CPS") to Curascript Pharmacy Services, Inc. and Curascript PBM Services, Inc.
(collectively, the "Buyers") for a one time cash payment of approximately $41.3
million. The Buyers are newly formed affiliates of GTCR Golder Rauner, LLC, and
the Buyers are led by certain members of the former CPS management team. Prior
to its disposition, CPS had offered specialty mail order pharmacy services and
prescription benefit management services.
Coram expects to recognize a gain on the sale of the CPS business of
approximately $19 million. The sale generated cash proceeds of approximately
$38.0 million after related expenses. Of that amount, $28.5 was applied to pay
the outstanding principal on the company's Senior Credit Facility. The remaining
net cash proceeds of $9.5 million were used to repay a portion of the
outstanding principal under the company's Series A Senior Subordinated Notes
(the "Series A Note"). Following such repayment, the outstanding principal
balance under the Series A Notes was approximately $158.9 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Pro Forma Financial Information (unaudited)
(b) Unaudited Pro Forma Consolidated Balance Sheet at March 31, 2000.
1. Unaudited Pro Forma Consolidated Statements of Operations
for the year ended December 31, 1999 and for the three
months ended March 31, 2000.
2. Notes to the Unaudited Pro Forma Consolidated Financial
Statements.
(c) Exhibits
Exhibit
Number Description of Document
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2.1 Asset Purchase Agreement by and Between Curaflex Health
Services, Inc., Coram Healthcare Corporation, as Seller
Guarantor, Curascript Pharmacy, Inc., Curascript PBM
Services, Inc., and GTCR Fund VI, L.P., as Buyers'
Guarantor, Dated June 9, 2000 (exhibits excluded).
99.1 Press Release, issued July 31, 2000, announcing the sale
of CPS.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information (unaudited)
CORAM HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet as of March 31,
2000 and the unaudited pro forma consolidated statements of operations for the
year ended December 31, 1999 and the three months ended March 31, 2000 give
effect to the transaction described in Note 1 hereto. The unaudited pro forma
consolidated balance sheet at March 31, 2000 gives effect to the transaction as
if it occurred on the balance sheet date. The unaudited pro forma consolidated
statements of operations give effect to the transaction as if it occurred at the
beginning of the respective periods presented.
Pro forma adjustments have been made to exclude Coram Healthcare Corporation's
Prescription Services business operations and to give effect to events that are
directly attributable to the transaction. Explanations of these adjustments are
included in the Notes to the Unaudited Pro Forma Consolidated Financial
Statements. Neither expected benefits nor cost reductions anticipated by Coram
Healthcare Corporation (the "company") following consummation of the transaction
described in this Report have been reflected in the pro forma consolidated
financial statements, except for the reduction of interest expense pursuant to
the utilization of the proceeds from the transaction.
The unaudited pro forma consolidated financial statements have been prepared by
the company's management based upon the historical consolidated financial
statements of the company. These pro forma consolidated financial statements may
not be indicative of the results that actually would have occurred if the
disposition had occurred on the dates indicated. The unaudited pro forma
consolidated financial statements should be read in conjunction with the notes
to unaudited pro forma consolidated financial statements contained elsewhere
herein and the company's historical consolidated financial statements in its
annual report on Form 10-K and its quarterly reports on Form 10-Q.
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CORAM HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
MARCH 31, 2000
<TABLE>
<CAPTION>
ASSETS
CORAM HEALTHCARE PRO FORMA
CORPORATION ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ............................................. $ 149 $ 2,740 (A) $ 2,889
Cash limited as to use ................................................ 859 -- 859
Accounts receivable, net .............................................. 108,013 (19,814)(A) 88,199
Inventories ........................................................... 19,059 (2,231)(A) 16,828
Deferred income taxes, net ............................................ 415 -- 415
Other current assets .................................................. 6,816 (697)(A) 6,119
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Total current assets .......................................... 135,311 (20,002) 115,309
Property and equipment, net ............................................. 21,343 (1,963)(A) 19,380
Deferred income taxes, non-current, net ................................. 1,661 -- 1,661
Other deferred costs .................................................... 1,897 -- 1,897
Goodwill, net ........................................................... 213,544 (3,328)(B) 210,216
Other assets ............................................................ 16,119 (61)(A) 16,058
--------- --------- ---------
Total assets................................................... $ 389,875 $ (25,354) $ 364,521
========= ========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ...................................................... $ 29,659 $ (1,833)(A) $ 27,826
Accrued compensation .................................................. 9,707 (80)(A) 9,627
Interest payable ...................................................... 7,884 -- 7,884
Current maturities of long-term debt .................................. 568 -- 568
Income taxes payable .................................................. 228 200 (C) 428
Deferred income taxes ................................................. 919 -- 919
Accrued merger and restructuring ...................................... 5,705 (1,406)(A) 4,299
Other accrued liabilities ............................................. 9,535 (3,239)(A) 6,296
Net liabilities of discontinued operations ............................ 36,446 -- 36,446
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Total current liabilities ..................................... 100,651 (6,358) 94,293
Long-term debt, less current maturities ................................. 299,149 (38,000)(D) 261,149
Minority interest in consolidated joint ventures ........................ 1,302 -- 1,302
Other liabilities ....................................................... 14,197 -- 14,197
Deferred income taxes, non-current ...................................... 1,158 -- 1,158
Commitment and contingencies ............................................ -- -- --
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Total liabilities ............................................. 416,457 (44,358) 372,099
Stockholders' deficit:
Preferred stock ......................................................... -- -- --
Common stock ............................................................ 50 -- 50
Additional paid-in capital .............................................. 427,388 -- 427,388
Accumulated deficit ..................................................... (454,020) 19,004 (E) (435,016)
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Total stockholders' deficit ................................... (26,582) 19,004 (7,578)
--------- --------- ---------
Total liabilities and stockholders' deficit.................... $ 389,875 $ (25,354) $ 364,521
========= ========= =========
</TABLE>
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CORAM HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
CORAM HEALTHCARE PRO FORMA
CORPORATION ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Net revenue $ 521,196 $ (86,625)(1) $ 434,571
Cost of service 408,878 (75,336)(1) 333,542
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Gross profit 112,318 (11,289) 101,029
Operating expenses:
Selling, general and administrative expenses 96,809 (10,010)(1) 86,799
Provision for estimated uncollectable accounts 28,310 (1,382)(1) 26,928
Amortization of goodwill 10,784 (62)(2) 10,722
Restructuring costs 5,831 (646)(1) 5,185
Loss on impairment on assets 9,100 -- 9,100
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Total operating expenses 150,834 (12,100) 138,734
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Operating loss from continuing operations (38,516) 811 (37,705)
Other income (expense):
Interest expense (29,763) 3,590 (3) (26,173)
Other income, net 1,395 -- 1,395
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Loss from continuing operations before income taxes and
minority interest (66,884) 4,401 (62,483)
Income tax expense 440 -- 440
Minority interests in net income of consolidated joint
ventures 1,470 -- 1,470
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Net loss from continuing operations after income taxes
and minority interests $ (68,794) $ 4,401 $ (64,393)
========= ========= =========
Basic and Diluted loss per share from continuing
operations $ (1.39) $ (1.30)
========= =========
Weighted average common shares outstanding 49,512 49,512
========= =========
</TABLE>
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CORAM HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
CORAM HEALTHCARE PRO FORMA
CORPORATION ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Net revenue $ 134,796 $ (26,245)(1) $ 108,551
Cost of service 100,655 (22,733)(1) 77,922
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Gross profit 34,141 (3,512) 30,629
Operating expenses:
Selling, general and administrative expenses 23,456 (2,172)(1) 21,284
Provision for estimated uncollectible accounts 3,243 (263)(1) 2,980
Amortization of goodwill 2,578 (15)(2) 2,563
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Total operating expenses 29,277 (2,450) 26,827
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Operating income from continuing operations 4,864 (1,062) 3,802
Other income (expense):
Interest expense (6,676) 950 (3) (5,726)
Other income, net 404 (1)(1) 403
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Loss from continuing operations before income taxes and
minority interest (1,408) (113) (1,521)
Income tax expense 100 -- 100
Minority interests in net income of consolidated joint
ventures (19) -- (19)
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Net loss from continuing operations after income taxes
and minority interests $ (1,489) $ (113) $ (1,602)
========= ========= =========
Basic and Diluted loss per share from continuing
operations $ (0.03) $ (0.03)
========= =========
Weighted average common shares outstanding 49,638 49,638
========= =========
</TABLE>
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CORAM HEALTHCARE CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Transaction
On July 31, 2000, Coram Healthcare Corporation ("Coram" or the
"company") completed the sale of substantially all of the assets and assignment
of certain liabilities related to its Coram Prescription Services business
("CPS") to Curascript Pharmacy Services, Inc. and Curascript PBM Services, Inc.
(collectively, the "Buyers") for a one time cash payment of approximately $41.3
million. Coram expects to recognize a gain on the sale of the CPS business of
approximately $19 million. The sale generated cash proceeds of approximately
$38.0 million after related expenses. The Buyers are newly formed affiliates of
GTCR Golder Rauner, LLC, and the Buyers are led by certain members of the former
CPS management team. Prior to its disposition, CPS had offered specialty mail
order pharmacy services and prescription benefit management services.
2. Pro Forma Adjustments (Balance Sheet)
(A) To record disposition of the company's CPS business, eliminate
the related assets and liabilities and record incremental cash
proceeds not used to reduce outstanding borrowings under
long-term debt arrangements.
(B) To eliminate the company's goodwill attributable to the CPS
business.
(C) To record an estimated liability for income taxes relative to the
gain on the sale of the CPS business (primarily federal
alternative minimum taxes and state income taxes).
(D) To apply the net cash proceeds from the sale of the CPS business
to the principal balance of the company's long-term debt.
(E) To record the net gain on the sale of the company's CPS business.
3. Pro Forma Adjustments (Statements of Operations)
(1) To eliminate the CPS business revenue, cost of service and other
expenses.
(2) To eliminate the company's goodwill amortization expense
attributable to the CPS business.
(3) The company agreed to apply the net cash proceeds to reduce its
long-term debt obligations. Interest expense is adjusted for
estimated savings that would have resulted had the cash proceeds
from the sale of the CPS business been received at the beginning
of the period presented and used to repay a portion of the
company's long-term debt.
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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.
CORAM HEALTHCARE CORPORATION
Date: August 15, 2000 By: /s/ SCOTT R. DANITZ
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Name: Scott R. Danitz
Title: Senior Vice President,
Finance and Chief
Accounting Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
2.1 Asset Purchase Agreement by and Between Curaflex Health
Services, Inc., Coram Healthcare Corporation, as Seller
Guarantor, Curascript Pharmacy, Inc., Curascript PBM
Services, Inc., and GTCR Fund VI, L.P., as Buyers'
Guarantor, Dated June 9, 2000 (exhibits excluded).
99.1 Press Release, issued July 31, 2000, announcing the sale of
CPS.
</TABLE>
