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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 31, 1998
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MEDIRISK, INC.
(Exact name of registrant
as specified in its charter)
Delaware 000-22005 58-2256400
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
<TABLE>
<S> <C>
Two Piedmont Center, Suite 400, 3565 Piedmont Road, N.E., Atlanta, Georgia 30305
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(Address of principal executive officers) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (404) 364-6700
N/A
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(Former name or former address, if changed since last report)
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EXPLANATORY NOTE
This amendment on Form 8-K/A is being filed solely for the purpose of
amending Item 7(b) of the Registrant's Report on Form 8-K previously filed on
April 13, 1998 (the "Healthdemographics 8-K"). The Company has adjusted the pro
forma financial information set forth in Item 7(b) of the Healthdemographics 8-K
to reflect the results of applying new guidance from the Staff of the Securities
and Exchange Commission (the "Staff") regarding in-process research and
development. The new guidance was received after the Company originally filed
the Healthdemographics 8-K. Although the Company believes that its original
accounting treatment was in accordance with generally accepted accounting
principles, it has accepted the Staff's new guidance with respect to these
matters and has made certain adjustments as set fourth in this amended filing.
Item 7(b) of the Healthdemographics 8-K is superseded by this amendment. Items
2, 5, 7(a) and 7(c) of the Healthdemographics 8-K, as well as the previously
filed exhibits to the Healthdemographics 8-K, remain unchanged by this
amendment.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA FINANCIAL DATA
The unaudited pro forma consolidated condensed balance sheet set forth
below as of December 31, 1997 illustrates the estimated effects of the
Healthdemographics acquisition as if the acquisition had occurred on December
31, 1997. The unaudited pro forma consolidated condensed statement of operations
set forth below for the year ended December 31, 1997 gives effect to the
Company's acquisition of (i) Healthdemographics on March 31, 1998, (ii) CareData
Reports, Inc.("CareData") on August 28, 1997, and (iii) CIVS, Inc. ("CIVS") on
June 24, 1997, as if they had occurred on January 1, 1997. The
Healthdemographics, CIVS and CareData 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 30,
1998, and the historical financial statements and notes of: (i)
Healthdemographics, included in this Report on Form 8-K; (ii) CIVS, included in
the Company's Current Report on Form 8-K/A, filed with the Commission on
September 5, 1997; and (iii) CareData, included in the Company's Current Report
on Form 8-K/A, filed with the Commission on November 14, 1997. The pro forma
combined results are not necessarily indicative of the results that would have
been achieved had the acquisitions of Healthdemographics, CIVS and CareData
occurred on January 1, 1997 or of future operations.
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MEDIRISK, INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
December 31, 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
MEDIRISK HEALTHDEMOGRAPHICS ADJUSTMENTS CONSOLIDATED
-------- ------------------ ----------- ------------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 3,516 $ -- $ (302)(4) $ 3,214
Accounts receivable, net 3,802 114 -- 3,916
Prepaid expenses 698 -- -- 698
Other current assets 474 19 -- 493
-------- ------- ------- --------
Total current assets 8,490 133 (302) 8,321
-------- ------- ------- --------
Property and equipment 3,083 105 -- 3,188
Less accumulated depreciation and amortization 1,444 23 -- 1,467
-------- ------- ------- --------
Property and equipment, net 1,639 82 -- 1,721
-------- ------- ------- --------
Excess of cost over net assets of businesses
acquired, less accumulated amortization 7,556 -- 4,837 (1) 12,393
Intangible assets, less accumulated amortization 1,794 -- 120 (2) 1,914
Software development costs, less accumulated
amortization 1,008 -- -- 1,008
Other assets 171 -- -- 171
-------- ------- ------- --------
Total other assets 10,529 -- 4,957 15,486
-------- ------- ------- --------
Total assets $ 20,658 $ 215 $ 4,655 $ 25,528
======== ======= ======= ========
Current liabilities
Current installments of long-term debt and obligations under
capital leases $ 168 $ -- $ -- $ 168
Accounts payable 258 218 3,000 (1) 3,476
Accrued expenses 1,574 338 150 (3) 2,062
Deferred revenue 2,309 175 -- 2,484
-------- ------- ------- --------
Total current liabilities 4,309 731 3,150 8,190
Long-term debt and obligations under capital leases, excluding
current installments 165 246 2,395 (4) 2,806
-------- ------- ------- --------
Total liabilities 4,474 977 5,545 10,996
-------- ------- ------- --------
Shareholders' equity (deficit):
Common stock 4 -- -- 4
Additional paid in capital 28,559 784 (784)(6) 31,657
3,098 (5)
Accumulated deficit (12,379) (1,546) 1,546 (6) (17,129)
(4,750)(7)
-------- ------- ------- --------
16,184 (762) (890) 14,532
-------- ------- ------- --------
Total liabilities and shareholders' equity (deficit) $ 20,658 $ 215 $ 4,655 $ 25,528
======== ======= ======= ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
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MEDIRISK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
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Historical
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Healthdemo- 1997 Pro forma Pro forma
Medirisk graphics(8) Acquisitions(9) Adjustments Consolidated
-------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 16,749 $ 905 $ 1,730 $ -- $ 19,384
Salaries, wages and benefits 7,910 971 1,296 -- 10,177
Other operating expenses 4,374 752 1,099 -- 6,225
Depreciation and amortization 1,304 18 47 570(10) 1,939
Acquired in-process research
and development costs and integration costs 4,575 -- -- (4,258)(11) 317
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Operating income (loss) (1,414) (836) (712) 3,688 726
Interest income (expense), net 345 (26) 8 (523)(12) (196)
Provision for income taxes (707) -- -- 707 (13) --
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Income (loss) before extraordinary item $ (1,776) $ (862) $ (704) $ 3,872 $ 530
=========================================================================
Unaudited pro forma income (loss) per common
share before extraordinary item - basic and diluted ($0.45) $0.13
Unaudited pro forma weighted average number of common ===== =====
shares used in calculating unaudited income (loss)
per common share before extraordinary item -
basic and diluted 3,918 4,214(14)
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
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MEDIRISK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
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, 171,315 shares of common stock and the
assumption of net liabilities. 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 estimated to be
approximately $4.8 million, acquired products estimated to be approximately
$120,000, and excess of cost over net assets acquired estimated to be
approximately $1.8 million.
Effective June 1, 1997, the Company acquired all of the outstanding shares
of CIVS of Rockville, Maryland, a leading national provider of credentialing
services to hospitals and managed care organizations for approximately $3.5
million in cash and 129,166 shares of the Company's common stock and the
assumption of net assets of $76,000. 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 purchased in-process research and development costs of approximately
$3.1 million, acquired products of approximately $415,000, and excess of cost
over net assets acquired of approximately $1.1 million.
Effective August 1, 1997, the Company acquired all of the outstanding
shares of CareData of New York, New York, which creates reports analyzing
consumer satisfaction with more than 150 aspects of managed health care plans
and ranks specific health plans accordingly. The Company purchased CareData for
approximately $4.1 million in cash and 14,516 shares of Medirisk 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 $975,000, acquired products of approximately
$200,000, and excess of cost over net assets acquired of approximately $2.9
million. Approximately $3.0 million of contingent consideration resulting from
the CareData acquisition will be due and payable at the end of April 1998.
This payment will be treated as an increase in excess of cost over net assets
acquired.
The unaudited pro forma consolidated condensed balance sheet as of
December 31, 1997 illustrates the estimated effects of the Healthdemographics
acquisition as if the acquisition had occurred on December 31, 1997. The
unaudited pro forma consolidated condensed statement of operations for the year
ended December 31, 1997 illustrates the estimated effects of all these
acquisitions had they occurred on January 1, 1997.
The unaudited pro forma consolidated condensed financial statements 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 consolidated
condensed financial statements, such allocations have been made based upon
currently available information and management's estimates.
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The historical financial statements are derived from the audited
financial statements of the Company and Healthdemographics as of and for the
year ended December 31, 1997, and the unaudited financial statements of CIVS and
CareData for the periods beginning January 1, 1997 and ending on the effective
dates of the respective acquisitions.
The unaudited pro forma consolidated condensed financial statements 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 financial statements
should be read together with the Financial Statements and Notes thereto of the
Company, Healthdemographics, CIVS and CareData referred to above. The
unaudited pro forma consolidated condensed financial statements reflect the
following adjustments:
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(1) Reflects $1.8 million of goodwill recorded as a result of the
allocation of the Healthdemographics purchase price and the
$3.0 million of contingent consideration for the CareData acquisition
expected to be paid in April 1998.
(2) Reflects the technological know-how recorded as a result of the
allocation of the Healthdemographics purchase price.
(3) Reflects the accrual of direct acquisition costs recorded as a result
of the allocation of the Healthdemographics purchase price.
(4) Reflects the cash payment and borrowings against the Company's line
of credit to fund the cash portion of the Healthdemographics
acquisition.
(5) Reflects the value of the Company common stock issued in connection
with the acquisition of Healthdemographics.
(6) Reflects the elimination of the historical equity accounts of
Healthdemographics.
(7) Reflects the non-recurring write-off of acquired in-process research
and development costs recorded as a result of the allocation of the
Healthdemographics purchase price.
(8) Reflects the historical operating results of Healthdemographics for the
process research and development costs was recorded by the Company on
March 23, 1998. This charge is being excluded from the year ended
December 31, 1997 unaudited proforma consolidated condensed statement
of operations.
(9) Reflects the historical operating results of CIVS for the five months
ended May 31, 1997 and CareData for seven months ending July 31, 1997.
The operating results of these entities subsequent to their acquisition
effective dates through December 31, 1997 are included in the Company's
operating results.
(10) Reflects the additional amortization of intangible assets recorded as a
result of the allocation of the respective purchase prices. These
amounts were as follows:
<TABLE>
<CAPTION>
1997
----
(Amounts in thousands)
<S> <C>
CIVS 64
CareData 335
---
Total $570
</TABLE>
(11) Reflects the reversal of the non-recurring acquired in-process research
and development costs and integration costs associated with the
acquisitions of CIVS and CareData.
These charges were included in the December 31, 1997 historical
statements of operations and are being excluded from the year ended
December 31, 1997 unaudited pro forma consolidated condensed statement
of operations.
<TABLE>
<CAPTION>
1997
----
(Amounts in thousands)
<S> <C>
CIVS $3,280
CareData 978
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Total $4,258
=====
</TABLE>
(12) Reflects the additional interest expense on the cash borrowings used
to fund the acquisitions. These amounts were as follows:
<TABLE>
<CAPTION>
1997
----
(Amounts in thousands)
<S> <C>
Healthdemographics $216
CIVS 115
CareData 192
---
Total $523
===
</TABLE>
(13) Reflects decrease in income tax expense due to pro forma losses
incurred.
(14) Reflects the increased shares of common stock outstanding resulting from
the acquisitions. These shares were as follows:
<TABLE>
<CAPTION>
1997
----
(In thousands)
<S> <C>
Healthdemographics 171
CIVS 115
CareData 10
---
Total 296
===
</TABLE>
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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.
MEDIRISK, INC.
By: /s/ Thomas C. Kuhn III
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Thomas C. Kuhn III
Senior Vice President and Chief Financial Officer
Dated: January 28, 1999
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