-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EzQ5a/IxqpdBQiRla0rKnu2XIYFX3BsmKcDqiuQItM3C1ceSPWmZr34Az0LcoS+b 7TgaEd2zRVMXbBhQTgxg8w== 0000950144-96-008001.txt : 19961115 0000950144-96-008001.hdr.sgml : 19961115 ACCESSION NUMBER: 0000950144-96-008001 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960903 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESPONSE ONCOLOGY INC CENTRAL INDEX KEY: 0000763098 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 621212264 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09922 FILM NUMBER: 96660786 BUSINESS ADDRESS: STREET 1: 1775 MORIAH WOODS BLVD CITY: MEMPHIS STATE: TN ZIP: 38117 BUSINESS PHONE: 9017617000 MAIL ADDRESS: STREET 1: 1775 MORIAH WOODS BLVD CITY: MEMPHIS STATE: TN ZIP: 38117 FORMER COMPANY: FORMER CONFORMED NAME: RESPONSE TECHNOLOGIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BIOTHERAPEUTICS INC DATE OF NAME CHANGE: 19891221 8-K/A 1 RESPOSE ONCOLOGY FORM 8-K/A 09/03/96 1 UNITED STATES 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): September 3, 1996 RESPONSE ONCOLOGY, INC. (Exact name of registrant as specified in its charter) TENNESSEE (State or other jurisdiction of incorporation) 0-15416 62-1212264 (Commission File Number) (I.R.S. Employer Identification No.) 1775 MORIAH WOODS BLVD., MEMPHIS TENNESSEE 38117 (Address of principal executive offices, including Zip Code) (901) 761-7000 (Registrant's telephone number, including Area Code) NOT APPLICABLE (Former name or former address, if changed since last report) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On July 3, 1996, the Registrant acquired (the "Transaction") from the stockholders of Rymer, Zaravinos & Faig, M.D., P.A. (the "Sellers") 100% of the outstanding common stock (the "Acquired Stock") of Rosenberg & Kalman, M.D., P.A. (the "Acquired Business"). The total consideration (the "Purchase Price") paid for the Acquired Stock was approximately $8.1 million in cash, and $1.9 million in an unsecured, subordinated promissory note payable due on or before August 30, 2001. The Note may, at the election of the holder, be paid in Shares of Registrant Common Stock based on a price of 110% of the lessor of $12.50 per share or the average closing price per share on The Nasdaq Stock Markets National Market for the ten trading days immediately preceding the Closing Date. The issuance and delivery of Registrant Common Stock in full or partial payment of the Note have not been registered under the Securities Act of 1933 in reliance upon an exemption from such registration. The Acquired Stock was purchased by the Registrant directly from the Sellers. At the time of the Transaction, the Sellers had no material relationship with the Registrant. The assets of the Acquired Business include medical equipment, accounts receivable, office furnishings and fixtures, rights under a certain lease for certain office space, employee base and expertise, know-how in respect of management of a medical practice in the oncology and hematology specialty, computer systems, accounting books and records and other intangible assets. Such assets were historically used in the conduct by the Acquired Business of a group medical practice in the oncology and hematology specialty. Simultaneous with the consummation of the Transaction, a newly-formed professional association wholly owned by the Sellers and formed to continue the group medical practice theretofore conducted by the Sellers (the "New PA") entered into a long-term management services agreement (the "Service Agreement") with the Registrant providing for the management by the Registrant of the non-medical aspects of the practice thereafter conducted by the New PA. Pursuant to the Service Agreement, the Registrant will manage the non-medical aspects of the New PA's business and will permit the New PA to use office space, equipment and other assets owned or leased by the Registrant in exchange for an agreed-upon management fee. The cash portion of the Purchase Price was provided from the proceeds of a draw on the Registrant's unsecured acquisition credit facility provided through a syndicate of commercial banks led by NationsBank of Tennessee, N.A. Borrowings under such facility bear interest at a rate equal to LIBOR plus 2 5/8%, and are payable on or before May 31, 1998. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. 1. Pro Forma Balance Sheet and Statement of Operations for Registrant and Acquired Business as of June 30, 1996 and for the year ended December 31, 1995 and the six months ended June 30, 1996. 2. Audited Balance Sheet, Statement of Income, Statement of Shareholders' Equity, and the Statement of Cash Flows, including footnotes as of and for the year ended December 31, 1995 for Rosenberg and Kalman, M.D., P.A.+ 3. Exhibit 10(v) Stock Purchase Agreement by and among Response Oncology, Inc. and Stockholders of Rosenberg and Kalman, M.D., P.A. dated September 1, 1996.+ 4. Exhibit 10(x) Service Agreement between Response Oncology Inc., Rosenberg & Kalman, M.D., P.A., R&K, M.D., P.A. and Stockholders of R&K, M.D., P.A. dated as of September 1, 1996.+ ++ - ---------- + Previously filed on September 18, 1996 ++ Portions of Exhibit 10(x) have been omitted and filed separately with the Commission pursuant to a request for confidential treatment. 3 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. RESPONSE ONCOLOGY, INC. Dated: September 18, 1996 By: /s/ Debbie Elliott ----------------------------------------- Debbie Elliott, Executive Vice President of Finance 4 RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION BASIS OF PRESENTATION The accompanying pro forma consolidated balance sheet as of June 30, 1996 and the related pro forma consolidated statements of operations for the year ended December 31, 1995 and the six months ended June 30, 1996 give effect to the acquisitions of Rosenberg & Kalman, M.D., P.A. ("the Tamarac Practice"), Southeast Florida Hematology Oncology Group, P.A. ("the Fort Lauderdale Practice") Jeffrey L. Paonessa, M.D., P.A. ("Paonessa"), Knoxville Hematology Oncology Associates ("KHOA") and Oncology Hematology Group of South Florida, P.A. ("OHG"), (collectively referred to as the "Groups") as if the acquisitions of the Groups had occurred on January 1, 1995. The pro forma information is based on the historical audited financial statements of Response Oncology, Inc. and subsidiaries (the "Company") and the Groups, giving effect to the acquisitions under the purchase method of accounting, and the assumptions and adjustments in the accompanying notes to the pro forma consolidated financial information. The pro forma statements have been prepared by the Company's management based on the audited financial statements of the acquired entities. These pro forma statements may not be indicative of the results that would have occurred if the acquisitions had been in effect on the dates indicated or which may be obtained in the future. The pro forma statements do not reflect the effect of expense reductions and other operational changes, which, in the opinion of the Company, is likely to result in profitable operations for the Groups. The pro forma financial statements should be read in conjunction with the consolidated financial statements and notes of Response Oncology, Inc. and subsidiaries. 5 Response Oncology, Inc. and Subsidaries Pro Forma Consolidated Balance Sheet June 30, 1996 (Unaudited) Caption> Previous Acquisition Historical Subsequent to Pro Forma Pro Forma Tamarac Pro Forma Total Company June 30, 1996 Adjustments Results Practice Adjustments Proforma Pro Forma ----------- ------------- ------------ ----------- ---------- ----------- ------------ ------------ Cash $ 156,021 $ 35,563 $ (35,563) $ 156,021 $ 41,149 $ (41,149) $ 156,021 Short-term 100,000 100,000 100,000 Accounts receivable, net 19,513,233 625,077 134,923 20,273,233 722,159 227,841 $ 950,000 21,223,233 Supplies 1,396,416 178,836 (118,019) 1,457,233 122,701 (4,201) 118,500 1,575,733 Prepaids 789,185 43,987 833,172 833,172 Advances to affiliated physician groups 2,269,400 2,269,400 2,269,400 Other current assets 1,144,360 1,144,360 26,534 (19,486) 7,048 1,151,408 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ------------ Total current assets 25,368,615 839,476 25,328 26,233,419 912,543 163,005 1,075,548 27,308,967 Property and equipment, net 5,492,805 265 18,460 5,511,530 81,964 (33,292) 48,672 5,560,202 Deferred charges, net 608,344 608,344 608,344 Management Services Agreements 43,839,012 11,233,774 55,072,786 15,685,484 15,685,484 70,758,270 Other asseets 94,839 94,839 19,536 (19,536) 94,839 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ------------ Total assets $75,403,615 $ 839,741 $11,277,562 $87,520,918 $1,014,043 $15,795,661 $16,809,704 $104,330,622 =========== =========== =========== =========== ========== =========== =========== ============ Accounts payable $ 4,690,291 $ 394,232 $ (197,204) $ 4,887,319 $ 366,000 $ 3,991 $ 369,991 $ 5,257,310 Accrued expenses 3,045,881 3,045,881 10,276 468,953 479,229 3,525,110 Notes payable 636,451 250,000 (250,000) 636,451 9,586 (9,586) 636,451 Current portion of deferred tax liability 69,386 (69,386) Capital lease obligations 46,181 46,181 46,181 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ------------ Total current liabilities 8,418,804 713,618 (516,590) 8,615,832 385,862 463,358 849,220 9,465,052 Notes payable 33,378,362 6,442,972 39,821,334 16,674 9,983,326 10,000,000 49,821,334 Deferred tax liability 9,615,942 4,298,951 13,914,893 5,960,484 5,960,484 19,875,377 Minority interest 322,166 322,166 322,166 Stockholders' equity Preferred stock 27,833 27,833 27,833 Common stock 75,818 501 675 76,994 76,994 Paid-in capital 62,817,203 1,177,176 63,994,379 63,994,379 Retained earnings (accumulated deficit) (39,252,513) 125,622 (125,622) (39,252,513) 611,209 (611,209) (39,252,513) ----------- ----------- ----------- ----------- ---------- ----------- ----------- ------------ Total liabilities and stockholders equity $75,403,615 $ 839,741 $11,277,562 $87,520,918 $1,013,745 $15,795,959 $16,809,704 $104,330,622 =========== =========== =========== =========== ========== =========== =========== ============
See accompanying notes to pro forma consolidated financial information. 6 Response Oncology, Inc. and Subsidiaries Pro Forma Consolidated Statement of Operations Six Months Ended June 30, 1996 (Unaudited)
Prior to Acquisition Historical By The Pro Forma Pro Forma Company Company Adjustments Results ---------------------------------------------------------------- Revenue: Net revenue $28,439,467 $5,573,980 (b) $34,013,447 Other Income 73,946 $ 79,311 (79,311) 73,946 Net patient service revenue 8,740,673 (8,740,673)(a) ---------------------------------------------------------------- Total Revenue 28,513,413 8,819,984 (3,246,004) 34,087,393 Expenses: Operating expenses 21,774,512 5,991,454 (1,934,909)(a) 25,831,057 General and administrative 2,718,852 2,718,852 Depreciation and amortization 1,325,161 84,492 389,401 (d) 1,799,054 Interest 656,783 32,796 628,605 (c) 1,318,184 Provision for doubtful accounts 822,341 822,341 ---------------------------------------------------------------- Total Expenses 27,297,649 6,108,742 (916,903) 32,489,488 Earnings before minority interest 1,215,764 2,711,242 (2,329,101) 1,597,905 Minority interest 155,110 155,110 ---------------------------------------------------------------- Net earnings to common stockholders $ 1,060,654 $2,711,242 $(2,329,101) $1,442,795 ================================================================
Tamarac Pro Forma Total Practice Adjustments Pro Forma Pro Forma ----------- ------------- ---------- ----------- Revenue: Net revenue $1,544,769 (b) $1,544,769 $35,558,216 Other Income 73,946 Net patient service revenue $2,191,161 (2,191,161)(a) ----------- ------------- ---------- ----------- Total Revenue 2,191,161 (646,392) 1,544,769 35,632,162 Expenses: Operating expenses 1,639,447 (712,609)(a) 926,838 26,757,895 General and administrative 2,718,852 Depreciation and amortization 10,523 197,019 (d) 207,542 2,006,596 Interest 332,500 (e) 332,500 1,650,684 Provision for doubtful accounts 822,341 ----------- ------------- ---------- ---------- Total Expenses 1,649,970 (183,090) 1,466,880 33,956,368 Earnings before minority interest 541,191 (463,302) 77,889 1,675,794 Minority interest 155,110 ----------- ------------- ---------- ----------- Net earnings to common stockholders $ 541,191 $ (463,302) $ 77,889 $ 1,520,684 =========== ============= ========== ===========
See accompanying notes to pro forma consolidated financial information 7 Response Oncology, Inc. and Subsidiaries Pro Forma Consolidated Statement of Operations Year Ended December 31, 1995 (Unaudited)
Previous Acquisitions Historical - Subsequent to Pro Forma Pro Forma Company December 31, 1995 Adjustments Results --------------------------------------------------------------------- Revenue: Net revenue $44,297,798 $18,243,674 (b) $62,541,472 Other Income 282,011 $ 352,353 (352,353) 282,011 Net patient service revenue 27,549,686 (27,549,686)(a) --------------------------------------------------------------------- Total Revenue 44,579,809 27,902,039 (9,658,365) 62,823,483 Expenses: Operating expenses 32,892,728 20,844,972 (6,245,867)(a) 47,491,833 General and administrative 5,512,306 5,512,306 Depreciation and amortization 1,736,055 396,580 1,385,692 (d) 3,518,327 Interest 16,860 269,114 2,641,818 (c) 2,927,792 Provision for doubtful accounts 2,105,696 2,105,696 --------------------------------------------------------------------- Total Expenses 42,263,645 21,510,666 (2,218,357) 61,555,954 Earnings before minority interest 2,316,164 6,391,373 (7,440,008) 1,267,529 Minority interest 1,806 1,806 --------------------------------------------------------------------- Earnings before income taxes 2,314,358 6,391,373 (7,440,008) 1,265,723 Income tax expense 262,237 (262,237)(e) --------------------------------------------------------------------- Net earnings 2,314,358 6,129,136 (7,177,771) 1,265,723 Common stock dividend to preferred stockholders 3,825 3,825 --------------------------------------------------------------------- Net earnings to common stockholders $ 2,310,533 $6,129,136 $(7,177,771) $ 1,261,898 ===================================================================== Tamarac Pro Forma Total Practice Adjustments Pro Forma Pro Forma ------------------------------------------------- ----------- Revenue: Net revenue $2,958,745 (b) $2,958,745 $65,500,217 Other Income 282,011 Net patient service revenue $4,196,802 (4,196,802)(a) ------------------------------------------------- ----------- Total Revenue 4,196,802 (1,238,057) 2,958,745 65,782,228 Expenses: Operating expenses 4,491,377 (2,294,210)(a) 2,197,167 49,689,000 General and administrative 5,512,306 Depreciation and amortization 22,807 364,751 (d) 387,558 3,905,885 Interest 665,000 (c) 665,000 3,592,792 Provision for doubtful accounts 2,105,696 ------------------------------------------------- ----------- Total Expenses 4,514,184 (1,264,459) 3,249,725 64,805,679 Earnings before minority interest (317,382) 26,402 (290,980) 976,549 Minority interest 1,806 ------------------------------------------------- ----------- Earnings before income taxes (317,382) 26,402 (290,980) 974,743 Income tax expense (113,092) 113,092 ------------------------------------------------- ----------- Net earnings (204,290) (86,690) (290,980) 974,743 Common stock dividend to preferred stockholders 3,825 ------------------------------------------------- ----------- Net earnings to common stockholders $ (204,290) $ (86,690) $ (290,980) $ 970,918 ================================================= ===========
See accompanying notes to pro forma consolidated financial information. 8 RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The accompanying pro forma consolidated financial information presents the pro forma financial condition of Response Oncology, Inc. and subsidiaries (the "Company") as of June 30, 1996 and the results of their operations for the year ended December 31, 1995 and the six months ended June 30, 1996. On September 1, 1996, the Company acquired from unaffiliated individual sellers 100% of the issued and outstanding general partnership interest ("the Acquired Interests") of Rosenberg & Kalman, M.D., P.A. ("the Tamarac Practice") The accompanying pro forma consolidated balance sheet includes the acquired assets, assumed liabilities and effects of financing, as if the Tamarac Practice had been acquired on June 30, 1996. The accompanying pro forma consolidated statements of operations reflect the pro forma results of operations, as adjusted, as if all acqusition practices held by the Company had been acquired on January 1, 1995. PRO FORMA CONSOLIDATED BALANCE SHEET The adjustments reflected in the pro forma consolidated balance sheet are to reflect the values of assets acquired and liabilities assumed in connection with the acquisition of the Tamarac Practice to reflect the issuance of long-term debt and cash payment to complete the acquisition; and to reflect the recording of management service agreements acquired. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS The adjustments reflected in the pro forma consolidated statements of operations are as follows: (a) To eliminate certain revenues and expenses of the Groups' that would not constitute revenue to the Company or be the responsibility of the Company pursuant to the Service Agreement. (b) To accrue net revenue resulting from service agreements related to the acquisition of the Group. Amounts were calculated based upon actual operating results for the period, as adjusted, under the terms of the related service agreement. (c) To reflect interest on the long-term debt issued. Interest was calculated at the annual rates ranging from 5% to 9.5%. (d) To record amortization of the intangible asset related to the service agreements. The assets are amortized over the service agreement period, or 40 years. 9 EXHIBIT INDEX
Exhibit Number Description of Exhibit ------- ---------------------- 10(v) Stock Purchase Agreement by and among Response Oncology, Inc., Alfred M. Kalman, M.D. and Abraham Rosenberg, M.D., dated as of September 1, 1996+ 10(x) Service Agreement between Response Oncology, Inc., Rosenberg & Kalman, M.D., P.A., R&K, M.D., P.A. and Stockholders of R&K, M.D., P.A. dated as of September 1, 1996+ ++
- ------------- + Previously filed on September 18, 1996 ++ Portions of Exhibit 10(x) have been omitted and filed separately with the Commission pursuant to a request for confidential treatment. -----END PRIVACY-ENHANCED MESSAGE-----