<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): March 31, 1999
CAREDATA.COM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 000-27056 58-2256400
- --------------------------------------------------------------------------------
<S> <C> <C>
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
<TABLE>
<S> <C>
Two Piedmont Center, Suite 400, 3565 Piedmont Rd., Atlanta, Georgia 30305
- -----------------------------------------------------------------------------------------
(Address of principal executive officers) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (404) 364-6700
MEDIRISK INC.
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Effective March 31, 1999, Caredata.com, Inc. (the "Company") acquired certain
assets of Healthcare Credentials Management Services, Inc., a Delaware
corporation ("HCMS"). The Company hereby amends its Current Report on Form 8-K
filed on April 15, 1999 with respect to the acquisition of certain assets of
HCMS to include the below-referenced financial statements and pro forma
financial information.
Healthcare Credentials Management Services, Inc.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
<TABLE>
<CAPTION>
Audited:
<S> <C>
Independent Auditors' Report......................................... 3
Balance Sheet as of December 31, 1998................................ 4
Statement of Operations for the year ended December 31, 1998......... 5
Statement of Stockholder's Equity (Deficit) for the year ended
December 31, 1998............................................ 6
Statement of Cash Flows for the year ended December 31, 1998......... 7
Notes to Financial Statements........................................ 8
Unaudited:
Balance Sheet as of March 31, 1999................................... 13
Statements of Operations for the three months ended March 31, 1999
and 1998..................................................... 14
Statements of Cash Flows for the three months ended March 31, 1999
and 1998..................................................... 15
Notes to Unaudited Financial Statements.............................. 16
</TABLE>
(B) PRO FORMA FINANCIAL INFORMATION.
The following pro forma financial information relating to the Company and HCMS,
as well as certain previously-acquired companies, is included herein:
<TABLE>
<S> <C>
Pro Forma Consolidated Condensed Statements of Operations for
the three-month period ended March 31, 1999.................. 18
Pro Forma Consolidated Condensed Statements of Operations for
the year ended December 31, 1998............................. 19
Notes to Unaudited Pro Forma Consolidated Condensed
Financial Statements......................................... 20
</TABLE>
(C) EXHIBITS.
2.8 Asset Purchase Agreement dated as of March 26, 1999 by and among Sweetwater
Health Enterprises, Inc. and Healthcare Credentials Management Services, Inc. In
accordance with Item 601(b)(2) of Regulation S-K, the Exhibits and Schedules to
the Asset Purchase Agreement have not been filed as exhibits to this Form 8-K/A.
The Registrant agrees to furnish supplementally a copy of the omitted exhibits
and schedules upon request.
-2-
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
Healthcare Credentials Management Services, Inc.:
We have audited the accompanying balance sheet of Healthcare Credentials
Management Services, Inc. (a wholly owned subsidiary of MMI Companies, Inc.) as
of December 31, 1998, and the related statements of operations, stockholder's
equity (deficit), and cash flows for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Healthcare Credentials
Management Services, Inc. (a wholly owned subsidiary of MMI Companies, Inc.) as
of December 31, 1998, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Atlanta, Georgia
June 4, 1999
-3-
<PAGE> 4
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Balance Sheet
December 31, 1998
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $ 56,354
Accounts receivable, less allowance for doubtful
accounts of $74,967 1,358,145
Other current assets 48,262
-----------
Total current assets 1,462,761
-----------
Property and equipment, net 2,932,345
Goodwill, less accumulated amortization of $708,732 2,835,675
Other assets 16,000
-----------
$ 7,246,781
===========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Due to Parent and affiliate $ 7,815,164
Trade accounts payable 176,767
Accrued salaries, wages, and benefits 123,828
Other accrued expenses 101,236
-----------
Total current liabilities 8,216,995
-----------
Stockholder's deficit:
Common stock, $1 par value; 1,000 shares
authorized, issued and outstanding 1,000
Additional paid-in capital 3,699,000
Accumulated deficit (4,670,214)
-----------
Total stockholder's deficit (970,214)
Commitments and contingencies
-----------
$ 7,246,781
===========
See accompanying notes to financial statements.
</TABLE>
-4-
<PAGE> 5
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Statement of Operations
Year ended December 31, 1998
<TABLE>
<S> <C>
Revenue $ 4,362,565
-----------
Operating expenses:
Salaries, wages, and benefits 4,170,375
Other operating expenses 2,603,082
Depreciation and amortization 1,161,626
-----------
7,935,083
-----------
Operating loss (3,572,518)
Income taxes --
-----------
Net loss $(3,572,518)
===========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE> 6
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Statement of Stockholder's Equity (Deficit)
Year ended December 31, 1998
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK ADDITIONAL STOCKHOLDER'S
---------------------- PAID-IN ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL DEFICIT (DEFICIT)
-------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 1,000 $ 1,000 $3,699,000 $(1,097,696) $ 2,602,304
Net loss -- -- -- (3,572,518) (3,572,518)
-------- -------- ---------- ----------- -------------
Balance at December 31, 1998 1,000 $ 1,000 $3,699,000 $(4,670,214) $ (970,214)
======== ======== ========== =========== =============
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE> 7
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Statement of Cash Flows
Year ended December 31, 1998
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $(3,572,518)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,161,626
Provision for doubtful accounts 74,967
Changes in operating assets and liabilities:
Accounts receivable 528,273
Other assets 549,204
Trade accounts payable and accrued expenses (256,325)
-----------
Net cash used in operating activities (1,514,773)
Cash flows from investing activities - purchases of property
and equipment (1,484,693)
Cash flows from financing activities - increase in due to
Parent and affiliate 2,783,371
-----------
Net decrease in cash and cash equivalents (216,095)
Cash and cash equivalents at beginning of year 272,449
-----------
Cash and cash equivalents at end of year $ 56,354
===========
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE> 8
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Notes to Financial Statements
December 31, 1998
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) DESCRIPTION OF BUSINESS
Healthcare Credentials Management Services, Inc. (the "Company") -
(a wholly owned subsidiary of MMI Companies, Inc. (the "Parent"))
provides physician credentialing services to healthcare payors and
providers. Effective March 31, 1999 certain assets of the Company
were acquired by Caredata.com, Inc. (see note 7).
(B) BASIS OF FINANCIAL STATEMENT PRESENTATION
The 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 income and
expenses for the year. Actual results could differ from those
estimates.
(C) CASH EQUIVALENTS
Cash equivalents at December 31, 1998 include $56,354 invested in
money market accounts with a major banking institution. For
purposes of the statement of cash flows, the Company considers all
highly liquid investments with original maturities of three months
or less to be cash equivalents.
(D) REVENUE RECOGNITION
Revenue from the sale of credentialing services is recorded at the
time of completion of the service.
(E) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation and amortization is
calculated on the straight-line method over the estimated useful
lives of the assets as follows:
<TABLE>
<S> <C>
Computer and office equipment 3-5 years
Furniture and fixtures 7 years
Purchased software 5 years
Leasehold improvements Over life of lease
</TABLE>
-8-
<PAGE> 9
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Notes to Financial Statements -- Continued
December 31, 1998
(F) GOODWILL
Goodwill, which represents the excess of purchase price over fair
value of net assets acquired, is amortized on a straight-line
basis over ten years. The Company assesses the recoverability of
this intangible asset by determining whether the amortization of
the goodwill balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired
operation. The assessment of the recoverability of goodwill will
be impacted if estimated future operating cash flows are not
achieved.
(G) IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS")
No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of. 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.
(H) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred income tax assets and liabilities are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and
operating loss carryforwards. 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.
(I) COMPREHENSIVE INCOME
On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its
components in a full set of financial statements. The Company has
no "other comprehensive income" to report for the year ended
December 31, 1998.
-9-
<PAGE> 10
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Notes to Financial Statements -- Continued
December 31, 1998
(2) PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<S> <C>
Computer and office equipment $ 1,415,577
Furniture and fixtures 489,376
Purchased software 2,285,852
Leasehold improvements 400,248
-----------
4,591,053
Less accumulated depreciation and amortization 1,658,708
-----------
$ 2,932,345
===========
</TABLE>
-10-
<PAGE> 11
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Notes to Financial Statements -- Continued
December 31, 1998
(3) INCOME TAXES
The Company has not recorded any income taxes for the year ended December
31, 1998 because of operating losses. A reconciliation of the expected
income tax benefit (based on a U.S. Federal statutory tax rate of 34%) to
the actual income taxes is as follows:
<TABLE>
<S> <C>
Computed "expected" tax benefit $ (1,214,656)
State income taxes, net of Federal income tax effect (142,573)
Increase in the valuation allowance for deferred income taxes 1,354,424
Other 2,805
------------
Actual income taxes $ --
============
</TABLE>
The tax effects of temporary differences and carryforwards, which give
rise to deferred income tax assets as of December 31, 1998, are presented
below:
<TABLE>
Deferred income tax assets:
<S> <C>
Net operating loss carryforwards $ 2,207,079
Goodwill 89,773
Property and equipment depreciation differences 61,300
Allowance for doubtful accounts 28,487
Other 83,054
------------
Total gross deferred income tax assets 2,469,693
Less valuation allowance 1,975,050
------------
Deferred income tax assets, net of
valuation allowance 494,643
Deferred income tax liability - research and development 494,643
------------
Net deferred income tax asset $ --
============
</TABLE>
The net change in the valuation allowance for the year ended December 31,
1998 was an increase of $1,354,424.
-11-
<PAGE> 12
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
(a wholly owned subsidiary of MMI Companies, Inc.)
Notes to Financial Statements -- Continued
December 31, 1998
Deferred income tax assets and liabilities are initially recognized for
differences between the financial statement carrying amount and the tax
bases of assets and liabilities which will result in future deductible or
taxable amounts and operating loss and tax credit carryforwards. A
valuation allowance is then established to reduce the deferred income tax
asset 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 or credit carryforwards depends
on having sufficient taxable income of an appropriate character 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) taxable income generated by future
operations.
At December 31, 1998, the Company had net operating loss carryforwards of
approximately $5,800,000, which expire beginning in 2012.
(4) LEASES
The Company has several noncancelable operating leases, primarily for the
building occupied in Kennesaw, Georgia. Rental expense for operating
leases during 1998 was $404,767. Future minimum lease payments under
noncancelable operating leases as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1999 $ 245,599
2000 247,796
2001 235,618
2002 228,879
2003 225,238
Thereafter 112,619
-----------
$ 1,295,749
===========
</TABLE>
(5) RELATED PARTY TRANSACTIONS
The balance of $7,815,164 due to Parent and affiliate is payable on
demand, non-interest bearing and consists of amounts provided by these
entities used to fund the day-to-day operations of the Company.
(6) CONTINGENCIES
The Company is involved in legal proceedings and litigation arising in
the ordinary course of business. In the opinion of management, the
resolution of such proceedings and litigation will not have a material
adverse effect on the financial condition or results of operations of the
Company.
(7) SUBSEQUENT EVENT
On March 31, 1999, certain assets of the Company were acquired by
Caredata.com, Inc. (formerly Medirisk, Inc.) of Atlanta, Georgia for
a purchase price of approximately $4.0 million in cash, plus potential
contingent consideration based upon a multiple of the Company's revenue
over a predetermined amount through the year 2000.
-12-
<PAGE> 13
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
UNAUDITED BALANCE SHEET
MARCH 31, 1999
(Amounts in thousands)
<TABLE>
<S> <C>
Non-current assets:
Property and equipment $ 150
Intangible assets 2,100
Excess of cost over net assets of
business acquired 1,850
------
Total assets $4,100
======
Current liabilities:
Accrued liabilities $ 100
------
Total current liabilities 100
Due to parent 4,000
------
Total liabilities 4,100
------
Stockholder's equity --
Total liabilities and stockholder's
equity $4,100
======
</TABLE>
See accompanying notes to unaudited financial statements.
-13-
<PAGE> 14
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1999 1998
-------- -------
<S> <C> <C>
Revenue $ 889 $1,312
Salaries, wages and benefits 569 1,297
Other operating expenses 708 581
Depreciation and amortization 239 183
----- ------
Operating loss (627) (749)
Income taxes - -
----- ------
Net loss $(627) $ 749
===== ======
</TABLE>
See accompanying notes to unaudited financial statements.
-14-
<PAGE> 15
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1999 1998
--------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (627) $(749)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 239 183
Decrease (increase) in:
Accounts receivable 329 753
Other assets (642) (4)
Increase (decrease) in:
Accounts payable and accrued expenses 2,577 (501)
------- -----
Net cash provided by (used in) operating
activities 1,876 (318)
------- -----
Cash flows from investing activities--
Purchases of property and equipment (193) (223)
------- -----
Cash flows from financing activities:
Net assets distributed to prior parent (1,615) --
Cash and cash equivalents provided
by (distributed to) prior parent (124) 171
------- -----
Net cash provided by (used in) financing
activities (1,739) 171
------- -----
Net decrease in cash and cash equivalents (56) (370)
Cash and cash equivalents at beginning of period 56 398
------- -----
Cash and cash equivalents at end of period $ -- $ 28
======= =====
</TABLE>
See accompanying notes to unaudited financial statements.
-15-
<PAGE> 16
HEALTHCARE CREDENTIALS MANAGEMENT SERVICES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) Basis of Presentation
These unaudited financial statements include the financial position of
the assets acquired by Caredata.com as of March 31, 1999, which are
limited to acquired software products, existing customer contracts,
work in process, fixed assets, and certain trademarks, copyrights, and
other intangible assets of Healthcare Credentials Management Services,
Inc. ("HCMS") and the results of HCMS operations of HCMS for the three
months ended March 31, 1999 and 1998. The assets acquired are accounted
for using the purchase method of accounting, with the purchase price
allocated to the relative fair value of the assets acquired. None of
HCMS' liabilities, facilities or personnel obligations were assumed by
Caredata.com.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for the fair presentation of
the unaudited financial statements of Healthcare Management Services,
Inc. as of March 31, 1999 and for the three months ended March 31, 1999
and 1998 have been included. Operating results for the three-month
period ended March 31, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999.
-16-
<PAGE> 17
UNAUDITED PRO FORMA FINANCIAL DATA
The unaudited pro forma consolidated condensed statement of operations
for the three months ended March 31, 1999 set forth below gives effect to the
Company's acquisition of certain assets of Healthcare Credentials Management
Services, Inc. ("HCMS") as if it had occurred on January 1, 1999. The unaudited
pro forma consolidated condensed statement of operations set forth below for the
year ended December 31, 1998 gives effect to the Company's acquisition of (i)
HCMS on March 31, 1999, (ii) Sweetwater Health Enterprises, Inc. on June 25,
1998, (iii) Successful Solutions on May 28, 1998, and (iv) Healthdemographics on
March 31, 1998, as if they had occurred on January 1, 1998. The Sweetwater,
Successful Solutions, and Healthdemographics acquisitions have each been
accounted for using the purchase method of accounting. The pro forma financial
data should be read in conjunction with the historical consolidated financial
statements and notes of the Company included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission (the "Commission")
on March 31, 1999, and the historical financial statements and notes of: (i)
HCMS, included in this report on Form 8-K/A; (ii) Sweetwater, included in the
Company's Current Report on Form 8-K/A, filed with the Commission on August 31,
1998; (iii) Successful Solutions, included in the Company's Current Report on
Form 8-K/A, filed with the Commission on June 5, 1998, and (iv)
Healthdemographics, included in the Company's Current Report on Form 8-K, filed
with the Commission on April 13, 1998. The pro forma combined results are not
necessarily indicative of the results that would have been achieved had the
acquisitions of HCMS, Sweetwater, Successful Solutions, and Healthdemographics
occurred on January 1, 1998 or of future operations.
-17-
<PAGE> 18
CAREDATA.COM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
------------------------------------------------------------------------
HISTORICAL
-------------------------------- PRO FORMA PRO FORMA
CAREDATA.COM HCMS(1) ADJUSTMENTS CONSOLIDATED
------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 8,078 $ 889 -- $ 8,967
Salaries, wages and benefits 3,857 569 -- 4,426
Other operating expenses 2,366 708 -- 3,074
Depreciation and amortization 1,002 239 164 (2) 1,405
------- ----- ----- -------
Operating income (loss) 853 (627) (164) 62
Interest income (expense), net 273 -- (55)(3) 218
Provision for income taxes (442) -- -- (442)
------- ----- ------ -------
Net Income (loss) 684 (627) (219) (162)
======= ===== ====== =======
Unaudited pro forma income (loss) per
common share
Basic and diluted $ 0.09 $ (0.02)
======= =======
Unaudited pro forma weighted average
number of common shares used in
calculating unaudited net income
(loss) per
common share - basic 7,391 7,391
common share - diluted 7,816 7,391
</TABLE>
See accompanying notes to unaudited pro forma financial data.
-18-
<PAGE> 19
CAREDATA.COM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------------------------
HISTORICAL
-----------------------------------------------
1998 PRO FORMA PRO FORMA
CAREDATA.COM HCMS(4) ACQUISITIONS(4) ADJUSTMENTS CONSOLIDATED
------------ ------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 27,204 $ 4,363 $ 4,180 $ -- $ 35,747
Salaries, wages and benefits 12,972 4,170 4,006 -- 21,148
Other operating expenses 8,040 2,604 4,210 -- 14,854
Depreciation and amortization 2,815 1,162 212 1,094 (5) 5,283
Acquired in-process research and
development costs and
integration costs 13,547 -- -- (13,012)(6) 535
-------- ------- -------- -------- --------
Operating income
(loss) (10,170) (3,573) (4,248) 11,918 (6,073)
Interest income (expense), net 626 -- (161) (652)(7) (187)
Provision for income taxes (550) -- -- -- (550)
-------- -------- -------- -------- --------
Income (loss) before
extraordinary item $(10,094) $ (3,573) $ (4,409) $ 11,266 $ (6,810)
======== ======== ======== ======== ========
Unaudited pro forma income (loss)
per common share before
extraordinary item - basic and
diluted $ (1.66)(4) $ (1.08)
======== ========
Unaudited pro forma weighted
average number of common shares
used in calculating unaudited
income (loss) per common share
before extraordinary
item - basic and diluted 6,094 6,333 (8)
</TABLE>
See accompanying notes to unaudited pro forma financial data.
-19-
<PAGE> 20
CAREDATA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA
Effective March 31, 1999, Caredata.com, Inc. (the "Company") acquired
certain assets of Healthcare Credentials Management Services, Inc., a Delaware
corporation ("HCMS"), for approximately $4 million in cash (the "Acquisition").
HCMS, based in Deerfield, Illinois, provides physician credentialing software
and services to healthcare payors and providers. HCMS offers a comprehensive
selection of physician credentialing services to hospitals and managed care
organizations to evaluate professional relationships with physicians and secure
accreditation by industry associations. In addition, HCMS provides software
used by healthcare organizations to facilitate in-house credentialing and
network management. The acquisition was accounted for using the purchase method
of accounting with the results of operations of the business acquired included
in the Company's results of operations from the effective date of the
acquisition. The acquisition resulted in estimated acquired products of $2.1
million and estimated excess of cost over net assets acquired of $1.9 million.
Effective June 25, 1998, the Company acquired all of the outstanding
shares of Sweetwater Health Enterprises, Inc. of Dallas, Texas, which provides a
comprehensive selection of physician credentialing services to hospitals and
managed care organizations to evaluate professional relationships with
physicians and secure accreditation by industry associations. In addition,
Sweetwater provides a suite of quality management software used by health care
organizations to facilitate in-house credentialing and network management, as
well as track perceptions of care and individual physician performance.
Sweetwater also provides managed care and interim management services for health
care organizations throughout the country. Caredata.com purchased Sweetwater for
$6.2 million in cash. The acquisition was accounted for using the purchase
method of accounting with the results of operations of the business acquired
included in the Company's results of operations from the effective date of the
acquisition. The acquisition resulted in purchased in-process research
and development costs of $3.5 million, acquired products of $2.2
million and excess of cost over net assets acquired of $3.8 million.
Effective May 28, 1998, the Company acquired all of the outstanding
shares of Successful Solutions of Vidalia, Georgia, which provides decision
support tools, consulting services and training materials to hospitals and
physician groups to assist them in improving patient outcomes, achieving the
efficient delivery of care and establishing billing and coding practices that
comply with industry requirements. The Company purchased Successful Solutions
for approximately $2.9 million in cash and 189,811 shares of common stock. The
acquisition was accounted for using the purchase method of accounting with the
results of operations of the business acquired included from the effective date
of the acquisition. The acquisition resulted in in-process research and
development costs of approximately $3.4 million, acquired products
of approximately $500,000, and excess of cost over assets acquired of
approximately $2.4 million.
Effective March 23, 1998, the Company acquired all of the outstanding
shares of Healthdemographics of San Diego, California, which provides databases
and decision-support tools that allow customers to forecast the supply of and
demand for health care services. The Company purchased Healthdemographics for
approximately $2.7 million in cash and 171,315 shares of common stock. The
acquisition was accounted for using the purchase method of accounting with the
results of operations of the business acquired included from the effective date
of the acquisition. The acquisition resulted in in-process research and
development costs of approximately $4.8 million, acquired products of
approximately $120,000, and excess of cost over net assets acquired of
approximately $1.8 million.
The unaudited pro forma financial data 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 purposes of the unaudited pro forma financial data, such
allocations have been made based upon currently available information and
management's estimates.
-20-
<PAGE> 21
The historical financial statements are derived from the unaudited
financial statements of the Company and HCMS for the three months ended March
31, 1999, the audited financial statements of the Company and HCMS for the year
ended December 31, 1998, and the unaudited financial statements of Sweetwater,
Successful Solutions, and Healthdemographics for the periods beginning January
1, 1998 and ending on the effective dates of the respective acquisitions.
The unaudited pro forma financial data 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 financial
data should be read together with the Financial Statements and Notes thereto of
the Company, HCMS, Sweetwater, Successful Solutions, and Healthdemographics
referred to above. The unaudited pro forma financial data reflect the following
adjustments:
(1) Reflects the historical operating results of HCMS for the
period from January 1, 1999 to March 31, 1999.
(2) Reflects the additional amortization of intangible assets
recorded as a result of the allocation of the HCMS purchase
price.
(3) Reflects the reduction in interest income due to cash used to
fund the acquisition of HCMS.
(4) Reflects the historical operating results of HCMS for the year
ended December 31, 1998, of Sweetwater from January 1, 1998 to
June 25, 1998, of Successful Solutions from January 1, 1998 to
May 28, 1998, and of Healthdemographics from January 1, 1998
to March 23, 1998. The operating results of these acquisitions
subsequent to their acquisition effective dates through
December 31, 1998 are included in the Company's operating
results.
(5) Reflects the additional amortization of intangible assets
recorded as a result of the allocation of the HCMS,
Sweetwater, Successful Solutions and Healthdemographics
purchase prices.
<TABLE>
<CAPTION>
1998
----------
(Amounts in
thousands)
<S> <C>
HCMS $ 656
Sweetwater 287
Successful Solutions 111
Healthdemographics 40
------
$1,094
======
</TABLE>
-21-
<PAGE> 22
(6) Removes the impact of the non-recurring acquired in-process
research and development costs recorded as a result of the
allocation of the Sweetwater, Successful Solutions, and
Healthdemographics purchase prices and the integration
activities related to these acquisitions and the 1997
acquisitions. These charges were included in the Company's
December 31, 1998 historical statements of operations and
are being excluded from the year ended December 31, 1998
unaudited pro forma consolidated condensed statements of
operations.
<TABLE>
<CAPTION>
1998
-----------
(Amounts in
thousands)
<S> <C>
Sweetwater $ 4,379
Successful Solutions 3,467
Healthdemographics 4,900
1997 acquisitions 266
---------
$ 13,012
=========
</TABLE>
(7) Reflects the additional interest expense on the cash borrowings
used to fund the acquisitions. These amounts were as follows:
<TABLE>
<CAPTION>
1998
-----------
(Amounts in
Thousands)
<S> <C>
HCMS $ 270
Sweetwater 238
Successful Solutions 96
Healthdemographics 48
------
Total $ 652
======
</TABLE>
(8) Reflects the increased shares of common stock outstanding
resulting from the acquisitions of Successful Solutions and
Healthdemographics.
<TABLE>
<CAPTION>
1998
-----------
(Amounts in
thousands)
<S> <C>
Successful Solutions $ 155
Healthdemographics 84
-------
$ 239
-------
</TABLE>
-22-
<PAGE> 23
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.
CAREDATA.COM, INC.
By: /s/ Thomas C. Kuhn III
Thomas C. Kuhn III.
Senior Vice President
Chief Financial Officer
Dated: June 14, 1999
-23-
<PAGE> 24
EXHIBIT INDEX
Document
2.8 Asset Purchase Agreement dated as of March 26, 1999 by and among Sweetwater
Health Enterprises, Inc. and Healthcare Credentials Management Services,
Inc.*
- ---------
*previously filed
