UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 9, 2017
TEAM HEALTH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-34583 | 36-4276525 | ||
(State or other jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
265 Brookview Centre Way, Suite 400 Knoxville, Tennessee |
37919 | |
(Address of registrant’s principal executive office) | (Zip code) |
(865) 693-1000
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 203.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure
On January 9, 2017, Tennessee Merger Sub, Inc., a Delaware corporation (“Merger Sub”), provided prospective investors with certain information in connection with proposed financing activities relating to the previously announced proposed acquisition of Team Health Holdings, Inc., a Delaware corporation (the “Company”), by funds affiliated with The Blackstone Group L.P., pursuant to the Agreement and Plan of Merger, dated as of October 30, 2016 (the “Merger Agreement”), by and among the Company, Tennessee Parent, Inc., a Delaware corporation, and Merger Sub (the “Merger”), an excerpt of which is included as Exhibit 99.1 to this report and incorporated by reference in this Item 7.01.
The information furnished pursuant to this Form 8-K (including the exhibits hereto) shall not be considered “filed” under the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any of the registrant’s filings under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless the registrant expressly states in such filing that such information is to be considered “filed” or incorporated by reference therein.
Item 8.01 Other Events
On January 9, 2017, the Company announced that Merger Sub intends to offer $1,015 million aggregate principal amount of Senior Notes due 2025 (the “Notes”), subject to market and other conditions. Merger Sub intends to use the proceeds from the offering of the Notes to finance a portion of the cash consideration for the Merger. Merger Sub is not an affiliate of the Company. A copy of the press release announcing the offering of the Notes is attached hereto as Exhibit 99.2 and is incorporated by reference in this Item 8.01.
Unless the Merger and certain related transactions are consummated simultaneously with the offering of the Notes, Merger Sub will deposit (or cause to be deposited) the gross proceeds of the offering of the Notes into a segregated escrow account until the date that certain escrow release conditions, including the consummation of the Merger, have been satisfied. The Notes will be senior unsecured obligations of Merger Sub. Upon the release of the proceeds from escrow, the Company will assume the obligations under the Notes and the Notes will initially be guaranteed by certain of the Company’s subsidiaries on a senior unsecured basis.
The Notes and the related guarantees will be offered to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been registered under the Securities Act or any state or other jurisdiction’s securities laws. Accordingly, the Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act and any applicable state or other jurisdiction’s securities laws.
In addition, on January 9, 2017, Team Health, Inc., a Tennessee corporation (“Team Health”), a wholly-owned subsidiary of the Company, requested that the trustee under the indenture, dated as of November 23, 2015, among Team Health, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee, governing Team Health’s 7.250% Senior Notes due 2023 (the “Existing Notes”), on behalf of Team Health, provide notices of redemption to the holders of the Existing Notes, specifying February 6, 2017 as the redemption date. The redemption of the Existing Notes is subject to the satisfaction of certain conditions specified in the notices of redemption, including the completion of the Merger and certain other transactions in connection with the Merger.
Forward Looking Statements
This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should,” “may,” “plan,” “project,” “predict” and similar expressions. The Company cautions that such “forward looking statements,” including without limitation, those relating to the Merger being completed within the anticipated timeframe or at all, the realization of the expected benefits of the Merger, the Company’s and the combined business’s future business prospects, revenue,
2
working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this report or in other statements attributable to the Company are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements.” Factors that could cause our actual results to differ materially from those expressed or implied in such “forward-looking statements,” include but are not limited to the occurrence of any event that could give rise to a termination of the Merger Agreement, the risks that the Merger disrupts current plans and operations, current or future government regulation of the healthcare industry, exposure to professional liability lawsuits and governmental agency investigations, the adequacy of insurance coverage and insurance reserves, as well as those factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
The Company’s forward looking statements speak only as of the date hereof and the date they are made. The Company disclaims any intent or obligation to update “forward looking statements” made in this report to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description | |
99.1 | Excerpts from materials to be provided to prospective investors on January 9, 2017. | |
99.2 | Press Release, dated January 9, 2017. |
3
SIGNATURE
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.
Dated: January 9, 2017 | TEAM HEALTH HOLDINGS, INC. | |
By: | /s/ David P. Jones | |
Name: David P. Jones | ||
Title: Chief Financial Officer |
4
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Excerpts from materials to be provided to prospective investors on January 9, 2017. | |
99.2 | Press Release, dated January 9, 2017. |
5
| | |
Year Ended December 31,
|
| |
Nine Months Ended
September 30, |
| |
Pro Forma
Twelve Months Ended September 30, 2016 |
| |||||||||||||||||||||||||||
(dollars in thousands)
|
| |
2013
|
| |
2014
|
| |
2015
|
| |
2015
|
| |
2016
|
| |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
(unaudited)
|
| |
(unaudited)
|
| ||||||||||||
Statement of comprehensive earnings data: | | | | | | | | ||||||||||||||||||||||||||||||
Net revenues before provision for uncollectibles
|
| | | $ | 4,313,848 | | | | | $ | 4,800,883 | | | | | $ | 5,999,458 | | | | | $ | 4,390,682 | | | | | $ | 5,581,210 | | | | | $ | 7,689,287 | | |
Provision for uncollectibles
|
| | | | 1,930,253 | | | | | | 1,981,240 | | | | | | 2,402,211 | | | | | | 1,773,062 | | | | | | 2,181,499 | | | | | | 3,003,821 | | |
Net revenues
|
| | | | 2,383,595 | | | | | | 2,819,643 | | | | | | 3,597,247 | | | | | | 2,617,620 | | | | | | 3,399,711 | | | | | | 4,685,465 | | |
Cost of services rendered (exclusive of depreciation and amortization shown separately below)
|
| | | | | | | ||||||||||||||||||||||||||||||
Professional service expenses
|
| | | | 1,867,817 | | | | | | 2,179,837 | | | | | | 2,836,474 | | | | | | 2,058,876 | | | | | | 2,703,436 | | | | | | 3,704,000 | | |
Professional liability costs
|
| | | | 74,185 | | | | | | 97,609 | | | | | | 107,505 | | | | | | 81,371 | | | | | | 114,351 | | | | | | 148,034 | | |
General and administrative expenses
(includes contingent purchase and other acquisition compensation expense of $12,230, $28,669, $23,962, $30,637 and $17,293 for the nine months ended September 30, 2015 and 2016 and for the years ended December 31, 2013, 2014 and 2015, respectively) |
| | | | 228,911 | | | | | | 281,054 | | | | | | 308,193 | | | | | | 219,214 | | | | | | 300,925 | | | | | | 427,865 | | |
Other (income) expenses, net
|
| | | | (4,536) | | | | | | (4,588) | | | | | | (1,935) | | | | | | (182) | | | | | | (7,947) | | | | | | (9,700) | | |
Depreciation
|
| | | | 17,070 | | | | | | 20,886 | | | | | | 24,581 | | | | | | 17,423 | | | | | | 25,081 | | | | | | 32,940 | | |
Amortization
|
| | | | 37,550 | | | | | | 55,647 | | | | | | 83,581 | | | | | | 62,085 | | | | | | 71,425 | | | | | | 93,119 | | |
Interest expense, net
|
| | | | 14,910 | | | | | | 15,050 | | | | | | 30,986 | | | | | | 14,132 | | | | | | 90,255 | | | | | | 191,677 | | |
Loss on refinancing of debt
|
| | | | — | | | | | | 3,648 | | | | | | — | | | | | | — | | | | | | 1,069 | | | | | | 1,069 | | |
Transaction, integration, and other reorganization costs
|
| | | | 3,809 | | | | | | 7,179 | | | | | | 58,301 | | | | | | 7,170 | | | | | | 48,337 | | | | | | 99,468 | | |
Earnings before income taxes
|
| | | | 143,879 | | | | | | 163,321 | | | | | | 149,561 | | | | | | 157,531 | | | | | | 52,779 | | | | | | (3,005) | | |
Provision for income taxes
|
| | | | 56,313 | | | | | | 65,232 | | | | | | 66,786 | | | | | | 65,178 | | | | | | 22,579 | | | | | | (3,344) | | |
Net earnings
|
| | | | 87,566 | | | | | | 98,089 | | | | | | 82,775 | | | | | | 92,353 | | | | | | 30,200 | | | | | | 338 | | |
Net earnings (loss) attributable to noncontrolling interest
|
| | | | 157 | | | | | | 351 | | | | | | 64 | | | | | | (78) | | | | | | 266 | | | | | | 408 | | |
Net earnings attributable to Team Health Holdings, Inc.
|
| | | $ | 87,409 | | | | | $ | 97,738 | | | | | $ | 82,711 | | | | | $ | 92,431 | | | | | $ | 29,934 | | | | | $ | (70) | | |
|
| | |
As of December 31,
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| |
As of
September 30, |
| |
Pro Forma
as of September 30, 2016 |
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(dollars in thousands)
|
| |
2013
|
| |
2014
|
| |
2015
|
| |
2015
|
| |
2016
|
| |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
(unaudited)
|
| |
(unaudited)
|
| ||||||||||||
Balance sheet data: | | | | | | | | ||||||||||||||||||||||||||||||
Cash and cash equivalents
|
| | | $ | 32,331 | | | | | $ | 20,094 | | | | | $ | 28,563 | | | | | $ | 18,194 | | | | | $ | 15,315 | | | | | $ | — | | |
Working capital(1)
|
| | | | 64,258 | | | | | | (143,054) | | | | | | 169,245 | | | | | | (39,765) | | | | | | (130,623) | | | | | | 302,490 | | |
Total assets(2)
|
| | | | 1,355,553 | | | | | | 1,967,802 | | | | | | 4,060,842 | | | | | | 2,144,179 | | | | | | 4,470,575 | | | | | | 7,240,783 | | |
Total debt(3)
|
| | | | 495,706 | | | | | | 798,330 | | | | | | 2,406,263 | | | | | | 755,000 | | | | | | 2,689,105 | | | | | | 3,615,000 | | |
Total shareholders’ equity including
noncontrolling interests |
| | | | 268,481 | | | | | | 422,636 | | | | | | 646,688 | | | | | | 569,408 | | | | | | 718,151 | | | | | | 2,622,339 | | |
| | |
Year Ended December 31,
|
| |
Nine Months Ended
September 30, |
| |
Twelve
Months Ended September 30, 2016 |
| |||||||||||||||||||||||||||
(dollars in thousands except ratios and
percentages) |
| |
2013
|
| |
2014
|
| |
2015
|
| |
2015
|
| |
2016
|
| |||||||||||||||||||||
Cash flow data: | | | | | | | | ||||||||||||||||||||||||||||||
Net cash provided by operating activities
|
| | | $ | 154,409 | | | | | $ | 198,663 | | | | | $ | 145,824 | | | | | $ | 131,943 | | | | | $ | 107,425 | | | | |||||
Net cash used in investing activities
|
| | | | (194,089) | | | | | | (543,017) | | | | | | (1,636,780) | | | | | | (127,381) | | | | | | (401,039) | | | | |||||
Net cash (used in) provided by financing activities
|
| | | | 30,771 | | | | | | 332,117 | | | | | | 1,499,425 | | | | | | (6,462) | | | | | | 280,366 | | | | |||||
Other financial data and credit statistics: | | | | | | | | ||||||||||||||||||||||||||||||
Adjusted EBITDA(4)
|
| | | | 251,268 | | | | | | 325,234 | | | | | | 387,539 | | | | | | 289,812 | | | | | | 346,535 | | | | | $ | 444,262 | | |
Management Pro Forma Adjusted EBITDA(4)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 527,683 | | |
Pro forma interest expense(5)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 191,677 | | |
Pro forma total debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,615,000 | | |
Ratio of pro forma total debt to Management Pro Forma Adjusted EBITDA
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6.85x | | |
Ratio of pro forma total debt less cash to Management Pro Forma Adjusted
EBITDA |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6.85x | | |
Maintenance capex(6)
|
| | | | 21,378 | | | | | | 24,576 | | | | | | 40,690 | | | | | | 31,123 | | | | | | 22,186 | | | | | | 31,753 | | |
Acquisition capex(7)
|
| | | | 188,212 | | | | | | 580,758 | | | | | | 1,625,404 | | | | | | 128,557 | | | | | | 419,132 | | | | | | 1,915,979 | | |
Ratio of Adjusted EBITDA to pro forma interest expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2.75x | | |
Adjusted EBITDA less maintenance capex
|
| | | | 229,890 | | | | | | 300,658 | | | | | | 346,849 | | | | | | 258,689 | | | | | | 324,349 | | | | | | 412,509 | | |
Cash flow conversion(8)
|
| | | | 91.5% | | | | | | 92.4% | | | | | | 89.5% | | | | | | 89.3% | | | | | | 93.6% | | | | | | 92.9% | | |
| | |
Year Ended December 31,
|
| |
Nine Months Ended
September 30, |
| |
Twelve
Months Ended September 30, 2016 |
| |||||||||||||||||||||||||||
(dollars in thousands)
|
| |
2013
|
| |
2014
|
| |
2015
|
| |
2015
|
| |
2016
|
| |||||||||||||||||||||
Net earnings attributable to Team Health Holdings, Inc.
|
| | | $ | 87,409 | | | | | $ | 97,738 | | | | | $ | 82,711 | | | | | $ | 92,431 | | | | | $ | 29,934 | | | | | $ | 20,214 | | |
Interest expense, net
|
| | | | 14,910 | | | | | | 15,050 | | | | | | 30,986 | | | | | | 14,132 | | | | | | 90,255 | | | | | | 107,109 | | |
Provision for income taxes
|
| | | | 56,313 | | | | | | 65,232 | | | | | | 66,786 | | | | | | 65,178 | | | | | | 22,579 | | | | | | 24,187 | | |
Depreciation
|
| | | | 17,070 | | | | | | 20,886 | | | | | | 24,581 | | | | | | 17,423 | | | | | | 25,081 | | | | | | 32,239 | | |
Amortization
|
| | | | 37,550 | | | | | | 55,647 | | | | | | 83,581 | | | | | | 62,085 | | | | | | 71,425 | | | | | | 92,921 | | |
Other (income) expenses, net(a)
|
| | | | (4,536) | | | | | | (4,588) | | | | | | (1,935) | | | | | | (182) | | | | | | (7,947) | | | | | | (9,700) | | |
Loss on extinguishment and refinancing of debt(b)
|
| | | | — | | | | | | 3,648 | | | | | | — | | | | | | — | | | | | | 1,069 | | | | | | 1,069 | | |
Contingent purchase and other acquisition compensation expense(c)
|
| | | | 23,962 | | | | | | 30,637 | | | | | | 17,293 | | | | | | 12,230 | | | | | | 28,669 | | | | | | 33,732 | | |
Transaction, integration and reorganization costs(d)
|
| | | | 3,809 | | | | | | 7,179 | | | | | | 58,301 | | | | | | 7,170 | | | | | | 48,337 | | | | | | 99,468 | | |
Equity based compensation expense(e)
|
| | | | 9,889 | | | | | | 16,152 | | | | | | 17,538 | | | | | | 13,197 | | | | | | 20,531 | | | | | | 24,872 | | |
Insurance subsidiaries interest income
|
| | | | 1,795 | | | | | | 2,012 | | | | | | 2,108 | | | | | | 1,558 | | | | | | 1,630 | | | | | | 2,180 | | |
Severance and other charges
|
| | | | 3,097 | | | | | | 8,553 | | | | | | 5,589 | | | | | | 4,590 | | | | | | 688 | | | | | | 1,687 | | |
Actuarial adjustment associated with prior periods
|
| | | | — | | | | | | 7,088 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Professional liability loss reserve adjustments associated with prior years(f)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,284 | | | | | | 14,284 | | |
Adjusted EBITDA
|
| | | $ | 251,268 | | | | | $ | 325,234 | | | | | $ | 387,539 | | | | | $ | 289,812 | | | | | $ | 346,535 | | | | | $ | 444,262 | | |
Out-of-period revenue adjustments(g) | | | | | (5,006) | | | ||||||||||||||||||||||||||||||
Out-of-period adjustment for IPC purchase accounting(h) | | | | | (3,681) | | | ||||||||||||||||||||||||||||||
Out-of-period adjustment for workers’ compensation reserve(i) | | | | | 528 | | | ||||||||||||||||||||||||||||||
Non-cash joint venture equity income(j) | | | | | (3,972) | | | ||||||||||||||||||||||||||||||
Pro forma full-year acquisition adjustments(k) | | | | | 37,652 | | | ||||||||||||||||||||||||||||||
IPC synergies(l) | | | | | 53,861 | | | ||||||||||||||||||||||||||||||
Start-up losses associated with new customer contracts(m) | | | | | 4,039 | | | ||||||||||||||||||||||||||||||
Management Pro Forma Adjusted EBITDA | | | | $ | 527,683 | | | ||||||||||||||||||||||||||||||
|
| | | | | | | | |
Not Yet Realized
|
| |
Full
Potential |
| ||||||||||||
(dollars in millions)
|
| |
Realized
|
| |
Actioned
|
| |
Prospective
|
| |||||||||||||||
Executive team and duplicative public company costs
|
| | | $ | 4 | | | | | $ | 2 | | | | | $ | 1 | | | | | $ | 8 | | |
Operations / headcount to consolidate markets
|
| | | | 8 | | | | | | 7 | | | | | | 5 | | | | | | 20 | | |
Corporate costs including health / dental insurance plans
|
| | | | 4 | | | | | | 4 | | | | | | (1) | | | | | | 7 | | |
Revenue cycle / IT: physician training and headcount
|
| | | | — | | | | | | — | | | | | | 2 | | | | | | 2 | | |
Cost synergy subtotal EBITDA impact
|
| | | $ | 16 | | | | | $ | 14 | | | | | $ | 7 | | | | | $ | 38 | | |
Managed care pricing: migrating IPC onto Team Health rates / contracts
|
| | | $ | 3 | | | | | $ | 6 | | | | | $ | 14 | | | | | $ | 23 | | |
Billing: AR intelligence software to improve collections
|
| | | | — | | | | | | 1 | | | | | | 9 | | | | | | 10 | | |
Improved subsidies from hospitals on IPC contracts
|
| | | | — | | | | | | 1 | | | | | | 2 | | | | | | 3 | | |
Operating synergy subtotal EBITDA impact
|
| | | $ | 4 | | | | | $ | 8 | | | | | $ | 25 | | | | | $ | 37 | | |
Total potential IPC synergy EBITDA impact
|
| | | $ | 20 | | | | | $ | 22 | | | | | $ | 32 | | | | | $ | 74 | | |
|
| | |
Team Health
Historical |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| |||||||||
Assets | | | | | | | | | | ||||||||||
Current assets: | | | | | | | | | | ||||||||||
Cash and cash equivalents
|
| | | $ | 15,315 | | | | | $ | (15,315)(a) | | | | | $ | — | | |
Short-term investments
|
| | | | 1,581 | | | | | | — | | | | | | 1,581 | | |
Accounts receivable, net
|
| | | | 821,963 | | | | | | — | | | | | | 821,963 | | |
Prepaid expenses and other current assets
|
| | | | 65,138 | | | | | | 88,800(a) | | | | | | 149,571 | | |
| | | | | | | | | | | (4,367)(b) | | | | | | | | |
Receivables under insured programs
|
| | | | 38,913 | | | | | | — | | | | | | 38,913 | | |
Income tax receivable
|
| | | | 3,287 | | | | | | — | | | | | | 3,287 | | |
Total current assets
|
| | | | 946,197 | | | | | | 69,118 | | | | | | 1,015,315 | | |
Insurance subsidiaries and other investments
|
| | | | 99,939 | | | | | | — | | | | | | 99,939 | | |
Receivables under insured programs
|
| | | | 102,272 | | | | | | — | | | | | | 102,272 | | |
Deferred income taxes
|
| | | | 48,625 | | | | | | — | | | | | | 48,625 | | |
Property and equipment, net
|
| | | | 84,141 | | | | | | — | | | | | | 84,141 | | |
Other intangibles, net
|
| | | | 320,477 | | | | | | — | | | | | | 320,477 | | |
Goodwill
|
| | | | 2,485,591 | | | | | | 2,701,090(c) | | | | | | 5,186,681 | | |
Other
|
| | | | 383,333 | | | | | | — | | | | | | 383,333 | | |
Total Assets
|
| | | $ | 4,470,575 | | | | | $ | 2,770,208 | | | | | $ | 7,240,783 | | |
Liabilities and shareholders’ equity | | | | | |||||||||||||||
Current liabilities: | | | | | |||||||||||||||
Accounts payable
|
| | | $ | 57,060 | | | | | $ | — | | | | | $ | 57,060 | | |
Accrued compensation and physician payable
|
| | | | 323,709 | | | | | | — | | | | | | 323,709 | | |
Other accrued liabilities
|
| | | | 305,931 | | | | | | — | | | | | | 305,931 | | |
Current maturities of long-term debt
|
| | | | 390,120 | | | | | | (390,120)(a) | | | | | | 26,125 | | |
| | | | | | | | | | | 26,125(b) | | | | | | | | |
Total current liabilities
|
| | | | 1,076,820 | | | | | | (363,995) | | | | | | 712,825 | | |
Long-term debt, less current maturities
|
| | | | 2,298,985 | | | | | | (2,298,985)(a) | | | | | | 3,529,000 | | |
| | | | | | | | | | | 3,529,000(b) | | | | | | | | |
Other non-current liabilities
|
| | | | 376,619 | | | | | | | | | | | | 376,619 | | |
Common stock
|
| | | | 743 | | | | | | (743)(c) | | | | | | — | | |
Additional paid in capital
|
| | | | 876,908 | | | | | | (876,908)(c) | | | | | | — | | |
Retained earnings (deficit)
|
| | | | (164,039) | | | | | | 164,039(c) | | | | | | (133,200) | | |
| | | | | | | | | | | (133,200)(a) | | | | | | | | |
Members equity
|
| | | | — | | | | | | 2,751,000(a) | | | | | | 2,751,000 | | |
TeamHealth shareholders’ equity
|
| | | | 713,612 | | | | | | 1,904,188 | | | | | | 2,617,800 | | |
Noncontrolling interests
|
| | | | 4,539 | | | | | | — | | | | | | 4,539 | | |
Total equity
|
| | | | 718,151 | | | | | | 1,904,188 | | | | | | 2,622,339 | | |
Total liabilities and shareholders’ equity
|
| | | $ | 4,470,575 | | | | | $ | 2,770,208 | | | | | $ | 7,240,783 | | |
|
| | |
Team Health
Historical |
| |
Completed
Team Health Acquisitions Pro Forma Adjustments(d)(f) |
| |
Team Health
Pro Forma |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| |||||||||||||||
Net revenue before provision for uncollectibles
|
| | | $ | 5,999,458 | | | | | $ | 1,638,078 | | | | | $ | 7,637,536 | | | | | | — | | | | | $ | 7,637,536 | | |
Provision for uncollectibles
|
| | | | 2,402,211 | | | | | | 655,894 | | | | | | 3,058,105 | | | | | | — | | | | | | 3,058,105 | | |
Net Revenue
|
| | | | 3,597,247 | | | | | | 982,184 | | | | | | 4,579,431 | | | | | | — | | | | | | 4,579,431 | | |
Professional service expense
|
| | | | 2,836,474 | | | | | | 719,238 | | | | | | 3,555,712 | | | | | | — | | | | | | 3,555,712 | | |
Professional liability cost
|
| | | | 107,505 | | | | | | 22,427 | | | | | | 129,932 | | | | | | — | | | | | | 129,932 | | |
General and administrative expenses
(including contingent purchase and other acquisition compensation expense) |
| | | | 308,193 | | | | | | 153,979 | | | | | | 462,172 | | | | | | — | | | | | | 462,172 | | |
Other (income) expense, net
|
| | | | (1,935) | | | | | | (2) | | | | | | (1,937) | | | | | | — | | | | | | (1,937) | | |
Transaction Cost
|
| | | | 58,301 | | | | | | — | | | | | | 58,301 | | | | | | — | | | | | | 58,301 | | |
Depreciation | | | | | 24,581 | | | | | | 4,232 | | | | | | 28,813 | | | | | | — | | | | | | 28,813 | | |
Amortization | | | | | 83,581 | | | | | | 1,196 | | | | | | 84,777 | | | | | | — | | | | | | 84,777 | | |
Interest expense, net
|
| | | | 30,986 | | | | | | 1,124 | | | | | | 32,110 | | | | | | (32,110)(b) | | | | | | 191,352 | | |
| | | | | | | | | | | | | | | | | | | | | | | 191,352(b) | | | | | | | | |
Loss on refinancing of debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Earnings before income taxes
|
| | | | 149,561 | | | | | | 79,990 | | | | | | 229,551 | | | | | | (159,242) | | | | | | 70,309 | | |
Provision for Taxes
|
| | | | 66,786 | | | | | | 30,720 | | | | | | 97,506 | | | | | | (71,909)(h) | | | | | | 26,397 | | |
Net earnings including noncontrolling interests
|
| | | | 82,775 | | | | | | 49,270 | | | | | | 132,045 | | | | | | (88,133) | | | | | | 43,912 | | |
Less: Net earnings attributable to noncontrolling interests
|
| | | | 64 | | | | | | — | | | | | | 64 | | | | | | — | | | | | | 64 | | |
Net earnings (loss) attributable to TeamHealth
|
| | | $ | 82,711 | | | | | $ | 49,270 | | | | | $ | 131,981 | | | | | $ | (88,133) | | | | | $ | 43,848 | | |
Weighted average shares outstanding:
|
| | | | | | |||||||||||||||||||||||||
Basic
|
| | | | 72,086 | | | | | | | | | | | | 72,086 | | | | | | | | | | | | 72,086 | | |
Diluted
|
| | | | 73,807 | | | | | | | | | | | | 73,807 | | | | | | | | | | | | 73,807 | | |
TeamHealth earnings per share as reported:
|
| | | | | | |||||||||||||||||||||||||
Basic
|
| | | $ | 1.15 | | | | | | | | | | | $ | 1.83 | | | | | | | | | | | $ | 0.61 | | |
Diluted
|
| | | $ | 1.12 | | | | | | | | | | | $ | 1.79 | | | | | | | | | | | $ | 0.59 | | |
| | |
Team Health
Historical |
| |
Completed
Team Health Acquisitions Pro Forma Adjustments(f) |
| |
Team Health
Pro Forma |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| |||||||||||||||
Net revenue before provision for uncollectibles
|
| | | $ | 5,581,210 | | | | | $ | 220,349 | | | | | $ | 5,801,559 | | | | | | — | | | | | $ | 5,801,559 | | |
Provision for uncollectibles
|
| | | | 2,181,499 | | | | | | 86,127 | | | | | | 2,267,626 | | | | | | — | | | | | | 2,267,626 | | |
Net Revenue
|
| | | | 3,399,711 | | | | | | 134,222 | | | | | | 3,533,933 | | | | | | — | | | | | | 3,533,933 | | |
Professional service expense
|
| | | | 2,703,436 | | | | | | 97,789 | | | | | | 2,801,225 | | | | | | — | | | | | | 2,801,225 | | |
Professional liability cost
|
| | | | 114,351 | | | | | | 3,521 | | | | | | 117,872 | | | | | | — | | | | | | 117,872 | | |
General and administrative expenses (including contingent purchase and other acquisition compensation expense)
|
| | | | 300,925 | | | | | | 11,528 | | | | | | 312,453 | | | | | | — | | | | | | 312,453 | | |
Other (income) expense, net
|
| | | | (7,947) | | | | | | — | | | | | | (7,947) | | | | | | — | | | | | | (7,947) | | |
Transaction Cost
|
| | | | 48,337 | | | | | | — | | | | | | 48,337 | | | | | | — | | | | | | 48,337 | | |
Depreciation | | | | | 25,081 | | | | | | — | | | | | | 25,081 | | | | | | — | | | | | | 25,081 | | |
Amortization | | | | | 71,425 | | | | | | — | | | | | | 71,425 | | | | | | — | | | | | | 71,425 | | |
Interest expense, net
|
| | | | 90,255 | | | | | | — | | | | | | 90,255 | | | | | | (90,255)(b) | | | | | | 143,994 | | |
| | | | | | | | | | | | | | | | | — | | | | | | 143,994(b) | | | | | | | | |
Loss on refinancing of debt
|
| | | | 1,069 | | | | | | — | | | | | | 1,069 | | | | | | — | | | | | | 1,069 | | |
Earnings before income taxes
|
| | | | 52,779 | | | | | | 21,385 | | | | | | 74,164 | | | | | | (53,739) | | | | | | 20,425 | | |
Provision for Taxes
|
| | | | 22,579 | | | | | | 8,180 | | | | | | 30,759 | | | | | | (22,990)(h) | | | | | | 7,769 | | |
Net earnings including noncontrolling interests
|
| | | | 30,200 | | | | | | 13,205 | | | | | | 43,405 | | | | | | (30,749) | | | | | | 12,656 | | |
Less: Net earnings attributable to noncontrolling interests
|
| | | | 266 | | | | | | — | | | | | | 266 | | | | | | — | | | | | | 266 | | |
Net earnings attributable to TeamHealth
|
| | | $ | 29,934 | | | | | $ | 13,205 | | | | | $ | 43,139 | | | | | $ | (30,749) | | | | | $ | 12,390 | | |
Weighted average shares outstanding: | | | | | | | |||||||||||||||||||||||||
Basic
|
| | | | 73,823 | | | | | | | | | | | | 73,823 | | | | | | | | | | | | 73,823 | | |
Diluted
|
| | | | 75,225 | | | | | | | | | | | | 75,225 | | | | | | | | | | | | 75,225 | | |
TeamHealth earnings per share as reported:
|
| | | | | | |||||||||||||||||||||||||
Basic
|
| | | $ | 0.41 | | | | | | | | | | | $ | 0.58 | | | | | | | | | | | $ | 0.17 | | |
Diluted
|
| | | $ | 0.40 | | | | | | | | | | | $ | 0.57 | | | | | | | | | | | $ | 0.16 | | |
| | |
Team Health
Historical |
| |
Completed
Team Health Acquisitions Pro Forma Adjustments(e)(f) |
| |
Team Health
Pro Forma |
| |
IPC
Historical |
| |
Completed
IPC Acquisitions Pro Forma Adjustments(g) |
| |
IPC Pro
Forma |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| ||||||||||||||||||||||||
Net revenue before provision for uncollectibles
|
| | | $ | 4,390,682 | | | | | $ | 755,678 | | | | | $ | 5,146,360 | | | | | $ | 563,165 | | | | | $ | 40,284 | | | | | $ | 603,449 | | | | | | — | | | | | $ | 5,749,809 | | |
Provision for uncollectibles
|
| | | | 1,773,062 | | | | | | 534,312 | | | | | | 2,307,374 | | | | | | 13,581 | | | | | | 955 | | | | | | 14,536 | | | | | | — | | | | | | 2,321,910 | | |
Net Revenue
|
| | | | 2,617,620 | | | | | | 221,366 | | | | | | 2,838,986 | | | | | | 549,584 | | | | | | 39,329 | | | | | | 588,913 | | | | | | — | | | | | | 3,427,899 | | |
Professional service expense
|
| | | | 2,058,876 | | | | | | 168,291 | | | | | | 2,227,167 | | | | | | 396,037 | | | | | | 29,733 | | | | | | 425,770 | | | | | | — | | | | | | 2,652,937 | | |
Professional liability cost
|
| | | | 81,371 | | | | | | 5,375 | | | | | | 86,746 | | | | | | 12,081 | | | | | | 943 | | | | | | 13,024 | | | | | | — | | | | | | 99,770 | | |
General and administrative expenses
(including contingent purchase and other acquisition compensation expense) |
| | | | 219,214 | | | | | | 16,863 | | | | | | 236,077 | | | | | | 105,767 | | | | | | 4,916 | | | | | | 110,683 | | | | | | — | | | | | | 346,760 | | |
Other (income) expense, net
|
| | | | (182) | | | | | | (0) | | | | | | (182) | | | | | | (2) | | | | | | — | | | | | | (2) | | | | | | — | | | | | | (184) | | |
Transaction Cost
|
| | | | 7,170 | | | | | | — | | | | | | 7,170 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,170 | | |
Depreciation | | | | | 17,423 | | | | | | 7 | | | | | | 17,430 | | | | | | 3,524 | | | | | | — | | | | | | 3,524 | | | | | | — | | | | | | 20,954 | | |
Amortization | | | | | 62,085 | | | | | | 2 | | | | | | 62,087 | | | | | | 996 | | | | | | — | | | | | | 996 | | | | | | — | | | | | | 63,083 | | |
Interest expense, net
|
| | | | 14,132 | | | | | | 2 | | | | | | 14,134 | | | | | | 936 | | | | | | — | | | | | | 936 | | | | | | (15,070)(b) | | | | | | 143,669 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | 143,669(b) | | | | | | | | |
Loss on refinancing of debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Earnings before income taxes
|
| | | | 157,531 | | | | | | 30,826 | | | | | | 188,357 | | | | | | 30,245 | | | | | | 3,737 | | | | | | 33,982 | | | | | | (128,559) | | | | | | 93,739 | | |
Provision for Taxes
|
| | | | 65,178 | | | | | | 12,626 | | | | | | 77,804 | | | | | | 11,493 | | | | | | 1,420 | | | | | | 12,913 | | | | | | (53,208)(h) | | | | | | 37,509 | | |
Net earnings including noncontrolling interests
|
| | | | 92,353 | | | | | | 18,200 | | | | | | 110,553 | | | | | | 18,752 | | | | | | 2,317 | | | | | | 21,069 | | | | | | (75,392) | | | | | | 56,230 | | |
Less: Net earnings attributable to noncontrolling interests
|
| | | | (78) | | | | | | — | | | | | | (78) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (78) | | |
Net earnings attributable to TeamHealth
|
| | | $ | 92,431 | | | | | $ | 18,200 | | | | | $ | 110,631 | | | | | $ | 18,752 | | | | | $ | 2,317 | | | | | $ | 21,069 | | | | | $ | (75,392) | | | | | $ | 56,308 | | |
Weighted average shares outstanding: | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Basic
|
| | | | 71,900 | | | | | | | | | | | | 71,900 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 71,900 | | |
Diluted
|
| | | | 73,351 | | | | | | | | | | | | 73,351 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 73,351 | | |
TeamHealth earnings per share as reported:
|
| | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Basic
|
| | | $ | 1.29 | | | | | | | | | | | $ | 1.54 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.78 | | |
Diluted
|
| | | $ | 1.26 | | | | | | | | | | | $ | 1.51 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.77 | | |
| | |
Team Health
Historical |
| |
Completed
Team Health & IPC(i) Acquisitions Pro Forma Adjustments |
| |
TeamHealth
Pro Forma |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| |||||||||||||||
Net revenue before provision for uncollectibles
|
| | | $ | 7,189,986 | | | | | $ | 499,301 | | | | | $ | 7,689,287 | | | | | $ | — | | | | | $ | 7,689,287 | | |
Provision for uncollectibles
|
| | | | 2,810,648 | | | | | | 193,173 | | | | | | 3,003,821 | | | | | | — | | | | | | 3,003,821 | | |
Net Revenue
|
| | | | 4,379,338 | | | | | | 306,127 | | | | | | 4,685,465 | | | | | | — | | | | | | 4,685,465 | | |
Professional service expense
|
| | | | 3,481,034 | | | | | | 222,966 | | | | | | 3,704,000 | | | | | | — | | | | | | 3,704,000 | | |
Professional liability cost
|
| | | | 140,485 | | | | | | 7,549 | | | | | | 148,034 | | | | | | — | | | | | | 148,034 | | |
General and administrative expenses (including contingent purchase and other acquisition compensation expense)
|
| | | | 389,904 | | | | | | 37,961 | | | | | | 427,865 | | | | | | — | | | | | | 427,865 | | |
Other (income) expense, net
|
| | | | (9,700) | | | | | | (0) | | | | | | (9,700) | | | | | | — | | | | | | (9,700) | | |
Transaction Cost
|
| | | | 99,468 | | | | | | — | | | | | | 99,468 | | | | | | — | | | | | | 99,468 | | |
Depreciation | | | | | 32,239 | | | | | | 701 | | | | | | 32,940 | | | | | | — | | | | | | 32,940 | | |
Amortization | | | | | 92,921 | | | | | | 198 | | | | | | 93,119 | | | | | | — | | | | | | 93,119 | | |
Interest expense, net
|
| | | | 107,109 | | | | | | 186 | | | | | | 107,295 | | | | | | (107,295) | | | | | | 191,677 | | |
| | | | | — | | | | | | — | | | | | | — | | | | | | 191,677 | | | | | | — | | |
Loss on refinancing of debt
|
| | | | 1,069 | | | | | | — | | | | | | 1,069 | | | | | | | | | | | | 1,069 | | |
Earnings before income taxes
|
| | | | 44,809 | | | | | | 36,567 | | | | | | 81,376 | | | | | | (84,382) | | | | | | (3,005) | | |
Provision for Taxes
|
| | | | 24,187 | | | | | | 13,361 | | | | | | 37,548 | | | | | | (40,891) | | | | | | (3,334) | | |
Net earnings including noncontrolling
interests |
| | | | 20,622 | | | | | | 23,207 | | | | | | 43,829 | | | | | | (43,491) | | | | | | 338 | | |
Less: Net earnings attributable to noncontrolling interests
|
| | | | 408 | | | | | | — | | | | | | 408 | | | | | | — | | | | | | 408 | | |
Net earnings attributable to
TeamHealth |
| | | $ | 20,214 | | | | | $ | 23,207 | | | | | $ | 43,421 | | | | | $ | (43,491) | | | | | $ | (70) | | |
Weighted average shares outstanding: | | | | | | | |||||||||||||||||||||||||
Basic
|
| | | | 73,823 | | | | | | | | | | | | 73,823 | | | | | | | | | | | | 73,823 | | |
Diluted
|
| | | | 75,225 | | | | | | | | | | | | 75,225 | | | | | | | | | | | | 75,225 | | |
TeamHealth earnings per share as reported:
|
| | | | | | |||||||||||||||||||||||||
Basic
|
| | | $ | 0.27 | | | | | | | | | | | $ | 0.59 | | | | | | | | | | | $ | 0.00 | | |
Diluted
|
| | | $ | 0.27 | | | | | | | | | | | $ | 0.58 | | | | | | | | | | | $ | 0.00 | | |
| Sources: | | | |||||
|
New $400mm Revolving Credit Facility
|
| | | $ | — | | |
|
New Term Loan Facility
|
| | | | 2,600,000 | | |
|
Notes offered hereby
|
| | | | 1,015,000 | | |
|
Sponsor equity
|
| | | | 2,751,000 | | |
|
Total Sources
|
| | | $ | 6,366,000 | | |
| Uses: | | | |||||
|
Equity purchase price
|
| | | $ | 3,362,000 | | |
|
Refinancing of existing debt
|
| | | | 2,722,000(i) | | |
|
Fees, Costs and Expenses
|
| | | | 282,000(ii) | | |
|
Total Uses
|
| | | $ | 6,366,000 | | |
|
|
Current long term debt
|
| | | $ | 390,120 | | |
|
Noncurrent long term debt, net of deferred financing costs
|
| | | | 2,298,985 | | |
|
Deferred Financing costs
|
| | | | 48,335 | | |
|
Existing cash
|
| | | | (15,315) | | |
|
Revolving credit facility increase
|
| | | | (125) | | |
|
Total refinance
|
| | | | 2,722,000 | | |
|
|
Fees and Expenses
|
| | | $ | 282,000 | | |
|
Deferred Fees and Expenses
|
| | | | 60,000 | | |
|
Non-Deferred Fees and Expenses
|
| | | $ | 222,000 | | |
|
Tax Impact
|
| | | | 88,800 | | |
|
After-tax Non-Deferred Fees and Expenses
|
| | | $ | 133,200 | | |
|
|
New Senior Secured Credit Facility and the notes offered hereby
|
| | | $ | 3,615,125(i) | | |
|
Estimated total deferred financing costs
|
| | | | 60,000 | | |
|
Current Portion
|
| | | | 26,125 | | |
|
Long Term Portion
|
| | | $ | 3,529,000 | | |
|
Repayment of Team Health debt, net of deferred financing costs
|
| | | | (2,689,105) | | |
|
Removal of former Team Health revolving credit facility deferred financing balance
|
| | | | (4,367) | | |
|
Removal of Team Health’s total interest expense for year ended December 31, 2015
|
| | | $ | 32,110 | | |
|
Removal of Team Health’s total interest expense for nine months ended September 30, 2016
|
| | | $ | 90,255 | | |
|
Removal of Team Health’s total interest expense for nine months ended September 30, 2015
|
| | | $ | 15,070 | | |
|
Removal of Team Health’s total interest expense for twelve months ended September 30, 2016
|
| | | $ | 107,295 | | |
|
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the year ended December 31, 2015
|
| | | $ | 191,352 | | |
|
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the nine months ended September 30, 2016
|
| | | $ | 143,994 | | |
|
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the nine months ended September 30, 2015
|
| | | $ | 143,669 | | |
|
Total interest and amortization of deferred financing costs expense for the New
Senior Secured Credit Facility and the notes offered hereby for the twelve months ended September 30, 2016 |
| | | $ | 191,677 | | |
| | |
+0.25%
|
| |
-0.25%
|
| ||||||
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the year ended December 31, 2015
|
| | | $ | 200,326 | | | | | $ | 182,379 | | |
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the nine months ended September 30, 2016
|
| | | $ | 150,742 | | | | | $ | 137,246 | | |
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the nine months ended September 30, 2015
|
| | | $ | 150,407 | | | | | $ | 136,931 | | |
Total interest and amortization of deferred financing costs expense for the New Senior Secured Credit Facility and the notes offered hereby for the twelve months ended September 30, 2016
|
| | | $ | 200,660 | | | | | $ | 182,694 | | |
|
Estimated cash consideration
|
| | | $ | 3,362,000 | | |
|
Assumption of debt, less deferred financing costs, cash, and short term investments
|
| | | | 2,720,419 | | |
| | | | | $ | 6,082,419 | | |
|
Accounts receivable
|
| | | | 821,963 | | |
|
Prepaid expenses and other current assets
|
| | | | 65,138(ii) | | |
|
Deferred financing costs of Existing Revolving Credit Facility
|
| | | | (4,367) | | |
|
Receivables under insured programs – current
|
| | | | 38,913 | | |
|
Income tax receivable
|
| | | | 3,287 | | |
|
Insurance sub and other investments
|
| | | | 99,939 | | |
|
Receivables under insured programs – noncurrent
|
| | | | 102,272 | | |
|
Deferred income taxes – noncurrent
|
| | | | 48,625 | | |
|
Property and equipment
|
| | | | 84,141 | | |
|
Intangibles, net
|
| | | | 320,477 | | |
|
Other assets
|
| | | | 383,333 | | |
|
Accounts payable – current
|
| | | | (57,060) | | |
|
Accrued compensation and physician payable – current
|
| | | | (323,709) | | |
|
Other accrued liabilities – current
|
| | | | (305,931) | | |
|
Other long term liabilities – noncurrent
|
| | | | (376,619) | | |
|
Noncontrolling interest
|
| | | | (4,539) | | |
|
Fair value of assets acquired and liabilities assumed
|
| | | $ | 895,738 | | |
|
Estimated goodwill
|
| | | | 5,186,681 | | |
|
Less: historical goodwill
|
| | | | 2,485,591 | | |
|
Goodwill adjustment
|
| | | $ | 2,701,090 | | |
|
Common Stock
|
| | | $ | 743(i) | | |
|
Additional Paid-in-Capital
|
| | | $ | 876,908(i) | | |
|
Retained Earnings
|
| | | $ | (164,039)(i) | | |
Exhibit 99.2
FOR IMMEDIATE RELEASE | |
INVESTOR CONTACT: | |
David Jones | |
Executive Vice President and | |
Chief Financial Officer | |
865-293-5299 | |
MEDIA CONTACT: | |
Pat Ball | |
Senior Vice President, Strategic Resources Group | |
800-818-1498 | |
Team
Health Holdings, Inc. Announces $1,015 Million Senior Notes Offering
by Tennessee Merger Sub, Inc.
KNOXVILLE, Tenn. – January 9, 2017 – Team Health Holdings, Inc. (the “Company”) (NYSE: TMH) today announced that Tennessee Merger Sub, Inc. (“Merger Sub”), an affiliate of The Blackstone Group L.P. (the “Sponsor”), formed in connection with the previously announced proposed acquisition of the Company by certain investment funds affiliated with the Sponsor pursuant to the Agreement and Plan of Merger, dated as of October 30, 2016 (the “Merger Agreement”), by and among the Company, Tennessee Parent, Inc., a Delaware corporation, and Merger Sub (the “Merger”), intends to offer $1,015 million in aggregate principal amount of its Senior Notes due 2025 (the “Notes”), subject to market and other conditions. Merger Sub intends to use the proceeds from the offering of the Notes to finance a portion of the cash consideration for the Merger. Upon consummation of the Merger, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation.
Unless the Merger and certain related transactions are consummated simultaneously with the offering of the Notes, Merger Sub will deposit (or cause to be deposited) the gross proceeds of the offering of the Notes into a segregated escrow account until the date that certain escrow release conditions, including the consummation of the Merger, have been satisfied. The Notes will be senior unsecured obligations of Merger Sub. Upon the release of the proceeds from escrow, the Company will assume the obligations under the Notes and the Notes will initially be guaranteed by certain of the Company’s subsidiaries on a senior unsecured basis.
The Notes and the related guarantees will be offered to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been registered under the Securities Act or any state or other jurisdiction’s securities laws. Accordingly, the Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act and any applicable state or other jurisdiction’s securities laws.
This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of any securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
About TeamHealth
At TeamHealth (NYSE: TMH), our purpose is to perfect physicians’ ability to practice medicine, every day, in everything we do. Through our more than 20,000 affiliated healthcare professionals and advanced practice clinicians, TeamHealth offers outsourced emergency medicine, hospital medicine, critical care, anesthesiology, orthopedic hospitalist, acute care surgery, obstetrics and gynecology hospitalist, ambulatory care, post-acute care and medical call center solutions to approximately 3,300 acute and post-acute facilities and physician groups nationwide. Our philosophy is as simple as our goal is singular: we believe better experiences for physicians lead to better outcomes—for patients, hospital partners and physicians alike. Join our team; we value and empower clinicians. Partner with us; we deliver on our promises.
The term “TeamHealth” as used throughout this release includes Team Health Holdings, Inc., its subsidiaries, affiliates, affiliated medical groups and providers, all of which are part of the TeamHealth organization. “Providers” are physicians, advanced practice clinicians and other healthcare providers who are employed by or contract with subsidiaries or affiliated entities of Team Health Holdings, Inc. All such providers exercise independent clinical judgment when providing patient care. Team Health Holdings, Inc. does not have any employees, does not contract with providers and does not practice medicine.
Forward-looking Statements
This communication contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and businesses of the Company. Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should,” “may,” “plan,” “project,” “predict” and similar expressions. The Company cautions readers of this communication that such “forward looking statements,” including without limitation, those relating to the proposed Merger being completed within the anticipated timeframe or at all, the realization of the expected benefits of the proposed Merger, the Company’s and the combined business’ future business prospects, revenue, working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this communication or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements.”
Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the inability to complete the proposed Merger due to the failure to obtain stockholder approval for the proposed Merger or the failure to satisfy other conditions to completion of the proposed Merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; risks related to disruption of management’s attention from the Company’s ongoing business operations due to the transaction; the effect of the announcement of the proposed Merger on the Company’s relationships with its customers, operating results and business generally; the risk that the proposed Merger will not be consummated in a timely manner; exceeding the expected costs of the Merger; the current U.S. and global economic conditions; the current U.S. and state healthcare reform legislative initiatives; our exposure to financial risk under the BPCI program and other value based payment programs; our ability to find suitable acquisition candidates or successfully integrate completed acquisitions, including our acquisition of IPC Healthcare, Inc. (“IPC”); our ability to realize the expected benefits of the acquisition of IPC; the risk that the IPC acquisition disrupts current plans and operations and disrupts our relationship with payors, physicians and other healthcare professionals; our ability to realize the value of intangible assets, including goodwill, recognized in connection with our acquisitions; the effect and interpretation of current or future government regulation of the healthcare industry, and our ability to comply with these regulations; our exposure to billing investigations and audits by private payors and federal and state authorities, as well as auditing contractors for governmental programs; our exposure to professional liability lawsuits; the adequacy of our insurance reserves; our reliance on reimbursements by third-party payors, as well as payments by individuals; the impact of recent or potential federal and state legislation that restricts our ability to balance bill patients, or prescribes how potential out of network charges are calculated and reimbursed; change in rates or methods of government payments for our services; the general level of emergency department patient volumes at our clients’ facilities; our exposure to the financial risks associated with fee for service contracts; our ability to timely or accurately bill for services; our ability to timely enroll healthcare professionals in the Medicare program; a reclassification of independent contractor physicians by tax authorities; the concentration of a significant number of our programs in certain states, particularly Florida, Ohio, and Tennessee; any loss of or failure to renew contracts within the Military Health System Program, which are subject to a competitive bidding process; our exposure to litigation; fluctuations in our quarterly operating results, which could affect our ability to raise new capital for our business; effect on our revenues if we experience a net loss of contracts; our ability to accurately assess the costs we will incur under new contracts; our ability to implement our business strategy and manage our growth effectively; our future capital needs and ability to raise capital when needed; our ability to successfully recruit and retain qualified healthcare professionals; enforceability of our non-competition and non-solicitation contractual arrangements with some affiliated physicians and professional corporations; the high level of competition in our industry; our dependence on numerous complex information systems and our ability to maintain these systems or implement new systems or any disruptions in our information systems; our ability to protect our proprietary technology and services; our loss of key personnel and/or ability to attract and retain highly qualified personnel; our ability to comply with privacy regulations regarding the use and disclosure of patient information; our ability to comply with federal or state anti-kickback laws; our ability to comply with federal and state physician self-referral laws and regulations or issuance of additional legislative restrictions; changes in existing laws or regulations, adverse judicial or administrative interpretations of these laws and regulations or enactment of new legislation; changes in accounting standards, rules and interpretations or inaccurate estimates or assumptions in the application of accounting policies and the impact on our financial
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statements; our exposure to a loss of contracts with our physicians or termination of relationships with our affiliated professional corporations in order to comply with antitrust laws; our substantial indebtedness and ability to incur substantially more debt; our ability to generate sufficient cash to service our debt; and restrictive covenants in our debt agreements, which may restrict our ability to pursue our business strategies and our ability to comply with them. For a more detailed discussion of these factors, see the information under the caption “Risk Factors” in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and in the Company’s Quarterly Reports on Form 10-Q filed with the SEC on November 4, 2016, August 2, 2016 and May 9, 2016 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Annual Report on Form 10-K filed with the SEC on February 22, 2016 and in the Company’s Quarterly Reports on Form 10-Q filed with the SEC on November 4, 2016, August 2, 2016 and May 9, 2016.
The Company’s forward-looking statements speak only as of the date of this communication or as of the date they are made. The Company disclaims any intent or obligation to update any “forward looking statement” made in this communication to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
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