<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 28, 1997
MEDIRISK, INC.
(Exact name of registrant
as specified in its charter)
Delaware 000-27056 58-2256400
- --------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two Piedmont Center, Suite 400, 3565 Piedmont Rd., Atlanta, Georgia 30305
- --------------------------------------------------------------------------------
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (404) 364-6700
N/A
------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
------------------------
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
On August 28, 1997, Medirisk, Inc. (the "Company") completed the
acquisition of CareData Reports, Inc. ("CareData"). The Company hereby amends
its Current Report on Form 8-K dated September 15, 1997 with respect to the
acquisition of CareData to include the below-referenced financial statements and
pro forma financial information.
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
CareData Reports, Inc.
<TABLE>
<CAPTION>
Audited:
--------
<S> <C>
Report of Independent Auditors.............................................................F-1
Balance Sheets as of December 31, 1996 and 1995............................................F-2
Statements of Operations for the years ended December 31, 1996 and 1995....................F-3
Statements of Stockholders' Equity for the years ended December 31,
1996 and 1995.....................................................................F-4
Statements of Cash Flows for the years ended December 31, 1996 and 1995....................F-5
Notes to Financial Statements..............................................................F-6
Unaudited:
----------
Balance Sheet as of June 30, 1997.........................................................F-12
Statements of Operations for the six months ended June 30, 1997 and 1996..................F-13
Statements of Cash Flows for the six months ended June 30, 1997 and 1996..................F-14
Notes to Unaudited Financial Statements...................................................F-15
</TABLE>
(B) PRO FORMA FINANCIAL INFORMATION.
The assets and liabilities of CareData were included in the balance
sheet of the Company included in the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997, as filed with the Securities and Exchange
Commission on November 14, 1997; therefore, no pro forma balance sheet is
presented. The following pro forma financial information relating to the Company
and CareData is included herein:
<TABLE>
<S> <C>
Pro Forma Consolidated Condensed Statements of Operations
for the nine-month period ended September 30, 1997 and for the year
ended December 31, 1996.....................................................F-16
Notes to Unaudited Pro Forma Consolidated Condensed
Statements of Operations....................................................F-18
</TABLE>
(C) EXHIBITS.
None.
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CareData Reports, Inc.:
We have audited the accompanying balance sheets of CareData Reports, Inc. as of
December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CareData Reports, Inc. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
October 11, 1997
<PAGE> 4
CAREDATA REPORTS, INC.
Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $296,729 197,809
Accounts receivable 349,845 295,750
Unbilled accounts receivable 57,500 --
-------- --------
Total current assets 704,074 493,559
-------- --------
Property and equipment (note 2) 54,889 10,111
Less accumulated depreciation 6,975 2,022
-------- --------
Net property and equipment 47,914 8,089
-------- --------
Other assets 4,735 --
-------- --------
$756,723 501,648
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current income taxes payable (note 4) $253,994 148,372
Accrued expenses 16,021 82,614
-------- --------
Total current liabilities 270,015 230,986
Deferred income tax liability (note 4) 9,691 --
-------- --------
Total liabilities 279,706 230,986
-------- --------
Stockholders' equity (note 5):
Common stock, $.01 par value; 2,000,000 shares
authorized; 706,000 shares issued and outstanding at
December 31, 1996 and 1995 7,060 7,060
Additional paid-in capital 86,940 86,940
Retained earnings 383,017 176,662
-------- --------
Total stockholders' equity 477,017 270,662
Commitments and contingencies (notes 3, 5, and 6)
$756,723 501,648
======== ========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 5
CAREDATA REPORTS, INC.
Statements of Operations
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenue $ 1,176,500 649,161
Salaries, wages, and benefits 507,040 150,990
Other operating expenses 333,243 170,808
Depreciation 4,953 2,022
----------- -----------
Operating income 331,264 325,341
Interest income 18,888 1,517
----------- -----------
Income before income taxes 350,152 326,858
Income tax expense (note 4) (143,797) (147,857)
----------- -----------
Net income $ 206,355 179,001
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 6
CAREDATA REPORTS, INC.
Statements of Stockholders' Equity
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Common stock Additional Total
----------------- paid-in Retained stockholders'
Shares Amount capital earnings equity
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 611,882 $6,119 55,881 (2,339) 59,661
Issuance of common stock 94,118 941 31,059 - 32,000
Net income - - - 179,001 179,001
-------- ------ ------- ------- -------
Balance at December 31, 1995 706,000 7,060 86,940 176,662 270,662
Net income - - - 206,355 206,355
-------- ------ ------- ------- -------
Balance at December 31, 1996 706,000 $7,060 86,940 383,017 477,017
======= ====== ====== ======= =======
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 7
CAREDATA REPORTS, INC.
Statements of Cash Flows
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 206,355 179,001
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,953 2,022
Increase (decrease) in:
Accounts receivable (111,595) (295,750)
Other assets (4,735) -
Income taxes payable 105,622 147,756
Accrued expenses (66,593) 65,669
Deferred income taxes 9,691 -
--------- --------
Net cash provided by operating activities 143,698 98,698
--------- --------
Cash flows from investing activities - purchases of
property and equipment (44,778) (10,111)
--------- --------
Cash flows from financing activities - proceeds
from issuance of common stock - 32,000
--------- --------
Net increase in cash and cash equivalents 98,920 120,587
Cash and cash equivalents at beginning of period 197,809 77,222
--------- --------
Cash and cash equivalents at end of period $ 296,729 197,809
========= ========
Supplemental disclosure of cash flow information -
cash paid during the year for income taxes $ 30,709 616
========= ========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 8
CAREDATA REPORTS, INC.
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of Business and Summary of Significant Accounting Policies
(a) Description of Business
CareData Reports, Inc. (the "Company") was incorporated in New York
in May 1994. The Company is principally engaged in providing services
to the health care industry related to information about consumer
satisfaction with managed care. Included in these services are
marketing research, issuance of survey reports, and the licensing of
its company name and survey results.
(b) Basis of Financial Statement Presentation
The Company's financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(c) Cash Equivalents
The Company considers cash equivalents to include all highly liquid
investments purchased with an original maturity of three months or
less.
(d) Revenue Recognition
The Company provides services/data to its customers derived from the
Company's annual surveys and customized studies. Revenue on these
sales is recognized upon the delivery of data. The Company also
licenses the exclusive rights to market the results of the surveys.
Revenue from these licenses is recognized as the related costs of
producing the surveys are incurred. All other revenue, including fees
for training, consulting fees, and other miscellaneous services, is
recognized upon the performance of the applicable services.
(e) Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is provided on the straight-line method
over the estimated useful lives of the assets ranging from three to
seven years.
(continued)
F-6
<PAGE> 9
CAREDATA REPORTS, INC.
Notes to Financial Statements
(f) Stock Option Plan
Upon implementation of the Company's stock option plan in 1996, the
Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-Based Compensation, which encourages
entities to recognize as compensation expense over the vesting period
the fair value of all stock-based awards on the date of the grant.
Alternatively, SFAS No. 123 allows entities to apply the provisions
of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations, and provide
pro forma net income (loss) and pro forma income (loss) per share
disclosures for employee stock option grants made in 1995 and future
years as if the fair-value-based method defined in SFAS No. 123 had
been applied. Under APB Opinion No. 25, compensation expense is
recorded on the date of grant if the current market price of the
underlying stock granted exceeds the exercise price. The Company has
elected to apply the provisions of APB Opinion No. 25. The effect of
SFAS No. 123 for 1996 is not material to the Company's financial
statements and, therefore, the pro forma and other disclosure
requirements have not been presented.
(g) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
of
The Company adopted the provisions of SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of, on January 1, 1996. This statement requires that
long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of
the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value
less costs to sell. Adoption of this statement did not have a
material impact on the Company's financial position, results of
operations, or liquidity.
(h) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred income tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred income tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(continued)
F-7
<PAGE> 10
CAREDATA REPORTS, INC.
Notes to Financial Statements
(2) Property and Equipment
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
Computer equipment $38,782 10,111
Office furniture and equipment 16,107 -
------- ------
$54,889 10,111
======= ======
</TABLE>
(3) Commitments
(a) Leases
During 1996, the Company entered into noncancelable operating lease
agreements for office space and office equipment. Prior to 1996, the
Company had entered into an agreement for office space on a
month-to-month basis. Future minimum payments under all such
noncancelable operating leases as of December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Year ending
December 31,
------------
<S> <C>
1997 $32,532
1998 26,178
1999 5,164
-------
$63,874
=======
</TABLE>
Rental expense for 1996 and 1995 was $25,074 and $25,000,
respectively.
(b) Profit Sharing Plan
During 1996, the Company adopted a profit sharing plan (the "Plan")
for the benefit of eligible employees. The Company contributed
$22,500 to the Plan in 1996.
(continued)
F-8
<PAGE> 11
CAREDATA REPORTS, INC.
Notes to Financial Statements
(4) Income Taxes
The provision for income taxes includes income taxes deferred because of
temporary differences between the financial statement and tax bases of
assets and liabilities.
Income tax expense for the years ended December 31, 1996 and 1995
consists of:
<TABLE>
<CAPTION>
1996 1995
---- ----
Current:
<S> <C> <C>
Federal $101,937 92,272
State and city 32,169 55,585
-------- -------
134,106 147,857
-------- -------
Deferred:
Federal 7,322 -
State and city 2,369 -
-------- -------
9,691 -
-------- -------
$143,797 147,857
======== =======
</TABLE>
The following is a summary of the difference between the income tax
expense as shown in the statements of operations and the income tax
expense that would result from applying the statutory Federal income tax
rate of 34% to income before income taxes:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Income tax expense at statutory
Federal income tax rate $119,052 111,132
Increase in income tax
expense resulting from:
State and city income tax
expense, net of Federal income
tax effect 22,394 36,673
Other, net 2,351 52
-------- -------
Actual income tax expense $143,797 147,857
======== =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred income tax liabilities at December 31, 1996 and
1995 are presented below:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred income tax liabilities -
Property and equipment, principally
due to differences in depreciation $9,691 -
====== ======
</TABLE>
(continued)
F-9
<PAGE> 12
CAREDATA REPORTS, INC.
Notes to Financial Statements
Under SFAS No. 109, deferred income tax assets and liabilities are
recognized for differences between the financial statement carrying
amounts and the tax bases of assets and liabilities which will result
in future deductible or taxable amounts and for net operating loss and
tax credit carryforwards. A valuation allowance is then established to
reduce the deferred income tax assets to the level at which it is "more
likely than not" that the tax benefits will be realized. Realization of
tax benefits of deductible temporary differences and operating loss and
tax credit carryforwards depends on having sufficient taxable income
within the carryback and carryforward periods. Sources of taxable
income that may allow for the realization of tax benefits include (1)
taxable income in the current year or prior years that is available
through carryback, (2) future taxable income that will result from the
reversal of existing taxable temporary differences, and (3) future
taxable income generated by future operations. The Company did not
record any deferred income tax assets as of December 31, 1996 and 1995.
Accordingly, no valuation allowance has been recorded for each of these
years.
(5) Stockholders' Equity
(a) Articles of Incorporation
The Company was incorporated in New York on May 3, 1994. The
Company's Articles of Incorporation authorize the issuance of
2,000,000 shares of common stock, $.01 par value.
(b) Stock Options
Beginning in 1996, the Company periodically grants stock options to
encourage stock ownership by and retain the services of certain key
employees. Options granted are determined at the discretion of the
Board of Directors. All options are earned over a four-year vesting
period at 20% per year after 60% in the first year, and expire at the
date of termination from employment. The following table summarizes
option plan activity for the year ended December 31, 1996:
<TABLE>
<CAPTION>
Exercise price
Shares per share
------ ---------
<S> <C> <C>
Options outstanding at December 31, 1995 - $ -
Granted 14,408 1.06
Exercised - -
Canceled - -
------ -----
Options outstanding at December 31, 1996 14,408 $1.06
====== =====
Options exercisable at December 31, 1996 5,762 $1.06
====== =====
</TABLE>
(continued)
F-10
<PAGE> 13
CAREDATA REPORTS, INC.
Notes to Financial Statements
(6) Subsequent Events - Unaudited
On August 28, 1997, the Company was acquired by Medirisk, Inc.
("Medirisk") of Atlanta, Georgia for a total purchase price of
approximately $4,225,788. The purchase price consists of $4,116,409 in
cash and $109,379 in stock representing 14,516 shares of Medirisk
unregistered common stock.
F-11
<PAGE> 14
CAREDATA REPORTS, INC.
UNAUDITED BALANCE SHEET
(Amounts in thousands)
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Current assets
Cash and cash equivalents $466
Accounts receivable, net 275
------------
Total current assets 741
Property and equipment, net 47
Other assets 82
------------
Total assets $ 870
============
Current liabilities
Accounts payable $ 58
Accrued expenses 341
Long-term debt and obligations under capital leases --
Deferred revenue 171
------------
Total current liabilities 570
Long-term debt and obligations under capital leases --
------------
Total liabilities 570
Total stockholders' equity 300
------------
Total liabilities and stockholders' equity $ 870
============
</TABLE>
See accompanying notes to unaudited financial statements.
F-12
<PAGE> 15
CAREDATA REPORTS, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------
1997 1996
---- ----
<S> <C> <C>
Revenue $ 433 $449
Salaries, wages and benefits 389 254
Other operating expenses 223 85
Depreciation and amortization 6 2
----- ----
Operating income (loss) (185) 108
Interest income, net 8 9
Income taxes -- (36)
----- ----
Net income (loss) $(177) $ 81
===== ====
</TABLE>
See accompanying notes to unaudited financial statements.
F-13
<PAGE> 16
CAREDATA REPORTS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
---------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(177) $ 81
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 6 2
Decrease (increase) in:
Accounts receivable 74 206
Other assets (19) --
Increase (decrease) in:
Accounts payable 57 20
Accrued expenses and other liabilities 61 (12)
Deferred revenue 171 131
----- ----
Net cash provided by operating activities 173 428
----- ----
Cash flows from investing activities:
Purchases of property and equipment (4) (6)
----- ----
Net cash used in investing activities (4) (6)
----- ----
Net increase in cash and cash equivalents 169 422
Cash and cash equivalents at beginning of period 297 198
----- ----
Cash and cash equivalents at end of period $ 466 $620
===== ====
</TABLE>
See accompanying notes to unaudited financial statements.
F-14
<PAGE> 17
CAREDATA REPORTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) Basis of Presentation
These unaudited financial statements include the financial position and
results of operations of CareData Reports, Inc. as of June 30, 1997 and
for the six months ended June 30, 1997 and 1996.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for the fair presentation of
the unaudited financial statements of CareData Reports, Inc. as of June
30, 1997 and for the six months ended June 30, 1997 and 1996 have been
included. Operating results for the six-month period ended June 30,
1997 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1997.
F-15
<PAGE> 18
MEDIRISK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
---------------------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
------------------------------
MEDIRISK, INC. CAREDATA ADJUSTMENTS COMBINED
-------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
(1)
Revenue $ 10,570 $ 611 $ -- $ 11,181
Salaries, wages and benefits 5,517 452 -- 5,969
Other operating expenses 2,848 338 -- 3,186
Depreciation and amortization 802 7 135(2) 944
Acquired in-process research
and development costs and integration costs 4,164 -- (975)(3) 3,189
-------- ----- ----- --------
Operating income(loss) (2,761) (186) 840 (2,107)
Interest income(expense), net 301 10 (192)(4) 119
Other income -- -- -- --
-------- ----- ----- --------
Net income(loss) before extraordinary item (2,460) (176) 648 (1,988)
Extraordinary item - Loss on early extinguishment of debt (806) -- -- (806)
-------- ----- ----- --------
Net loss (3,266) (176) 648 (2,794)
Series A and Series B convertible preferred stock
dividend requirement 25 -- -- 25
-------- ----- ----- --------
Net income(loss) attributable to common stock (3,291) $(176) $ 648 (2,819)
======== ===== ===== ========
Net loss per share of common stock $ (0.86) $ (0.73)
Weighted average number of common shares outstanding 3,829 3,839(5)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
-------------
CIVS ADJUSTMENTS CONSOLIDATED
------------- ----------- ------------
<S> <C> <C> <C>
(7)
Revenue $ 1,119 $ -- $ 12,300
Salaries, wages and benefits 844 -- 6,813
Other operating expenses 761 -- 3,947
Depreciation and amortization 40 64 (8) 1,048
Acquired in-process research
and development costs and integration costs -- (3,189)(9) --
-------- ------- --------
Operating income(loss) (526) 3,125 492
Interest income(expense), net (2) (115)(10) 2
Other income -- -- --
-------- ------- --------
Net income(loss) before extraordinary item (528) 3,010 494
Extraordinary item - Loss on early extinguishment of
debt -- -- (806)
-------- ------- --------
Net loss (528) 3,010 (312)
Series A and Series B convertible preferred stock
dividend requirement -- -- 25
-------- ------- --------
Net income(loss) attributable to common stock $ (528) $ 3,010 (337)
======== ======= ========
Net loss per share of common stock $ (0.09)
Weighted average number of common shares outstanding 3,954(11)
</TABLE>
See accompanying notes to unaudited proforma consolidated
condensed financial statements
F-16
<PAGE> 19
MEDIRISK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
------------------------------
MEDIRISK, INC. CAREDATA ADJUSTMENTS CONSOLIDATED
-------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
(6)
Revenue $ 8,904 $ 1,177 $ -- $ 10,081
Salaries, wages and benefits 6,093 513 -- 6,606
Other operating expenses 2,314 327 -- 2,641
Depreciation and amortization 787 5 232(2) 1,024
Acquired in-process research
and development costs 6,180 -- -- 6,180
-------- ------- ----- --------
Operating income(loss) (6,470) 332 (232) (6,370)
Interest expense, net (703) 19 (329)(4) (1,013)
Other income (57) -- -- (57)
Income taxes -- (144) 144(13) --
-------- ------- ----- --------
Net income(loss) before extraordinary item (7,230) 207 (417) (7,440)
Extraordinary item - Loss on early extinguishment of debt -- -- -- --
-------- ------- ----- --------
Net income (loss) (7,230) 207 (417) (7,440)
Series A and Series B convertible preferred stock
dividend requirement 202 -- -- 202
-------- ------- ----- --------
Net income(loss) attributable to common stock (7,432) $ 207 $(417) (7,642)
======== ======= ===== ========
Net loss per share of common stock $ (3.56) $ (3.64)
Weighted average number of common shares outstanding 2,087 2,102(5)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
-------------
CIVS ADJUSTMENTS CONSOLIDATED
------------- ----------- ------------
<S> <C> <C> <C>
(12)
Revenue $ 2,648 $ -- $ 12,729
Salaries, wages and benefits 1,218 -- 7,824
Other operating expenses 1,256 -- 3,897
Depreciation and amortization 60 154(8) 1,238
Acquired in-process research
and development costs -- -- 6,180
-------- ------- --------
Operating income(loss) 114 (154) (6,410)
Interest expense, net 4 (277)(10) (1,286)
Other income -- -- (57)
Income taxes -- -- --
-------- ------- --------
Net income(loss) before extraordinary item 118 (431) (7,753)
Extraordinary item - Loss on early extinguishment of debt -- -- --
-------- ------- --------
Net income (loss) 118 (431) (7,753)
Series A and Series B convertible preferred stock
dividend requirement -- -- 202
-------- ------- --------
Net income(loss) attributable to common stock $ 118 $ (431) (7,955)
======== ======= ========
Net loss per share of common stock $ (3.59)
Weighted average number of common shares outstanding 2,216(11)
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed statements
of operations.
F-17
<PAGE> 20
MEDIRISK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
Effective as of August 1, 1997 Medirisk, Inc. (the "Company") acquired
all of the shares of CareData Reports, Inc., a New York City-based healthcare
data company which provides information concerning members' satisfaction with
managed care to health plans, employers and pharmaceutical companies. The
Company purchased CareData for $4.1 million in cash and 14,516 shares of
Medirisk common stock. The Company recorded the acquisition using the purchase
method of accounting with $975,000 of the purchase price allocated to acquired
in-process research and development costs and charged to the consolidated
statement of operations during the third quarter ended September 30, 1997.
Effective as of June 1, 1997 Medirisk, Inc. (the "Company") acquired
all of the shares of CIVS, Inc., a Rockville, Maryland-based provider of
credentialling services to hospitals and managed care organizations, for $3.5
million in cash and 129,166 shares of the Company's Common Stock. The Company
recorded the acquisition using the purchase method of accounting with $3.1
million of the purchase price allocated to acquired in-process research and
development costs and charged to the consolidated statement of operations during
the second quarter ended June 30, 1997.
The unaudited pro forma consolidated condensed statements of operations
for the year ended December 31, 1996 and the nine months ended September 30,
1997 illustrate the estimated effects of these acquisitions had they occurred as
of the beginning of the periods presented.
The unaudited pro forma consolidated condensed statements of operations
have been prepared using the purchase method of accounting, whereby the total
cost of the acquisition is allocated to the tangible and intangible assets
acquired and liabilities assumed based upon their respective fair values at the
effective date of such acquisition. For purpose of the unaudited pro forma
consolidated condensed statements of operations, such allocations have been made
based upon currently available information and management's estimates.
The historical statements of operations are derived from the audited
financial statements of the Company, CIVS, Inc. and CareData Reports, Inc. for
the year ended December 31, 1996 and the unaudited financial statements of the
Company, CIVS, Inc. and CareData Reports, Inc. for the nine months ended
September 30, 1997.
The unaudited pro forma consolidated condensed statements of operations
do not purport to represent what the results of operations of the Company would
actually have been if the acquisitions had occurred on such dates or to project
the results of operations of the Company for any future date or period. The
unaudited pro forma consolidated condensed statements of operations should be
read together with the Financial Statements and Notes thereto of the Company,
CIVS, Inc. and CareData Reports, Inc. The unaudited pro forma consolidated
condensed statements of operations reflect the following adjustments:
(1) Reflects the historical operating results of CareData Reports, Inc. for
the seven months ended July 31, 1997. The operating results of CareData
Reports, Inc. for August and September of 1997 are included in the
Company's operating results.
(2) Reflects the additional amortization of intangible assets recorded as a
result of the allocation of the CareData Reports, Inc. purchase price.
These intangible assets and their lives are follows:
<TABLE>
<S> <C> <C>
Goodwill $2,874,859 15 years
Technological Know-how $ 200,000 5 years
</TABLE>
(3) Reflects the reversal of the nonrecurring acquired in-process research and
development costs incurred in the acquisition of CareData Reports, Inc.
This charge was included in the September 30, 1997 historical statements
of operations and is being excluded from the nine months ended September
30, 1997 pro forma statements of operations.
F-18
<PAGE> 21
(4) Reflects interest expense on the cash payment of $4.1 million to fund the
acquisition of the CareData Reports, Inc. at the prime rate (8%) for the
period.
(5) Reflects the increased shares of common stock outstanding resulting from
the acquisition of CareData Reports, Inc.
(6) Reflects the historical operating results of CareData Reports, Inc. for
the year ended December 31, 1996. Certain amounts have been reclassified
to conform to the Company's basis of presentation.
(7) Reflects the historical operating results of CIVS, Inc. for the five
months ended May 31, 1997. The operating results of CIVS, Inc. for
June through September 1997 are included in the Company's operating
results.
(8) Reflects the additional amortization of intangible assets recorded as a
result of the allocation of the CIVS, Inc. purchase price. These
intangible assets and their lives are as follows:
<TABLE>
<S> <C> <C>
Goodwill $1,072,000 15 years
Technological Know-how $ 415,000 5 years
</TABLE>
(9) Reflects the reversal of nonrecurring acquired in-process research and
development costs incurred in the acquisition of CIVS, Inc. as well as
integration costs incurred related to the acquisition. These charges were
included in the September 30, 1997 historical statements of operations and
are being excluded from the nine months ended September 30, 1997 unaudited
pro forma consolidated condensed statements of operations.
(10) Reflects interest expense on the cash payment of $3.5 million to fund the
acquisition of CIVS, Inc. at the prime rate (8%) for the period.
(11) Reflects the increased shares of common stock outstanding resulting from
the acquisition of CIVS, Inc.
(12) Reflects the historical operating results of CIVS, Inc. for the year ended
December 31, 1996. Certain amounts have been reclassified to conform to
the Company's basis of presentation.
(13) Reflects the decrease in income tax expense as the income is reduced to a
net loss.
F-19
<PAGE> 22
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.
MEDIRISK, INC.
By: /s/ KENNETH M. GOINS, JR.
-------------------------------------------
KENNETH M. GOINS, JR.
Executive Vice President
Chief Financial Officer
By: /s/ THOMAS C. KUHN III
-------------------------------------------
THOMAS C. KUHN III
Vice President and Corporate Controller
Chief Accounting Officer
Dated: November 14, 1997
