-----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, Rq7WQSawqqPe7NqR5Hrnaxa095AFlul51EOY7agK5acQsX7JjWrMm25nOEfR+FFL vHPMAIl/jxiBjpRylo+l5w== 0000950123-96-007259.txt : 19961212 0000950123-96-007259.hdr.sgml : 19961212 ACCESSION NUMBER: 0000950123-96-007259 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961125 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961211 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH MANAGEMENT SYSTEMS INC CENTRAL INDEX KEY: 0000861179 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 132770433 STATE OF INCORPORATION: NY FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20946 FILM NUMBER: 96678968 BUSINESS ADDRESS: STREET 1: 401 PARK AVE SOUTH CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126854545 MAIL ADDRESS: STREET 1: 401 PARK AVENUE SOUTH CITY: NEW YORK STATE: NY ZIP: 10016 8-K 1 FORM 8-K DATED 11-25-96 1 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): NOVEMBER 25, 1996 HEALTH MANAGEMENT SYSTEMS, INC. 401 PARK AVENUE SOUTH, NEW YORK, NEW YORK 10016 212-685-4545 INCORPORATED UNDER THE LAWS OF COMMISSION FILE NUMBER I.R.S. EMPLOYER IDENTIFICATION NUMBER STATE OF NEW YORK 0-20946 13-2770433
2 ITEM 5. OTHER EVENTS. Effective as of November 25, 1996 (the "Effective Time"), Health Management Systems, Inc. (the "Company") consummated the acquisition of Quality Standards in Medicine, Inc. ("QSM") in accordance with the Agreement and Plan of Merger, as amended (the "Merger Agreement"), by and among the Company, QSM Acquisition Corp. ("Sub"), a wholly owned subsidiary of the Company, and QSM. The common stockholders of QSM approved the Merger Agreement and the transactions contemplated thereby at a Special Meeting of Stockholders held on November 20, 1996. The Merger will be treated as a tax-free reorganization for federal income tax purposes, and will be accounted for utilizing the pooling of interests method of accounting. Pursuant to the Merger Agreement, QSM merged (the "Merger") with Sub, with the result that QSM became a wholly owned subsidiary of the Company. At the Effective Time, each share of QSM common and preferred stock issued and outstanding immediately prior to the Effective Time, together with all (i) promissory notes issued by QSM which were outstanding immediately prior to the closing date of the Merger (excluding promissory notes issued to the Company evidencing working capital loans made to QSM prior to the Effective Time) and (ii) common stock purchase warrants issued by QSM which were outstanding immediately prior to the Closing Date were converted into an aggregate of 260,000 shares of common stock, $.01 par value per share, of the Company. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (C) EXHIBITS 99 Press Release of Health Management Systems, Inc. relating to the consummation of the merger with Quality Standards in Medicine, Inc. 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 thereunto duly authorized. HEALTH MANAGEMENT SYSTEMS, INC. By: /s/ Phillip Siegel --------------------------------- Phillip Siegel Vice President and Chief Financial Officer Date: December 11, 1996 2 4 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ 99 Press Release of Health Management Systems, Inc. relating to the consummation of the merger with Quality Standards in Medicine, Inc. 3 EX-99 2 PRESS RELEASE 1 HEALTH MANAGEMENT SYSTEMS, INC. [HMS LOGO] 401 Park Avenue South New York, New York 10016 (212) 685-4545 (212) 857-5004 (fax) Nasdaq: HMSY PRESS RELEASE Release: November 26, 1996, 6:00 a.m. Contact: Felice Blanco, Assistant Corporate Secretary Patrick Hojlo Office of Investor Relations Noonan/Russo Communications (212) 857-5423 (212) 696-4455 ext. 246 E-Mail:invest@hmsy.com http://www.noonanrusso.com
HEALTH MANAGEMENT SYSTEMS, INC. REPORTS FOURTH QUARTER AND FISCAL YEAR 1996 RESULTS NEW YORK, N.Y. November 26, 1996 - Health Management Systems, Inc. (Nasdaq: HMSY) announced fourth quarter and fiscal year 1996 results today. As indicated in the Company's announcement of November 15, 1996, results for the quarter were below expectations, due primarily to shortfalls in revenue. HMSY's fourth quarter revenue of $23.9 million declined 3% from the comparable prior year period, with revenue from the Company's core proprietary services (RCR, TPLR, and CAMS, exclusive of affiliate revenue) declining 3%. HMSY's fourth quarter operating margin of $5.2 million produced an operating margin rate of 22%, an increase of $0.1 million or 2% in operating margin from the comparable prior year period. Net income for the quarter was $2.9 million, resulting in earnings per share of $0.16, a decrease of 6% from the same period last year. HMSY's fiscal year 1996 revenue of $100.7 million increased 12% over fiscal year 1995, with revenue from the Company's core proprietary services increasing 19%. During fiscal year 1996, the Company incurred a one-time charge relating to the discontinuance of a data processing agreement with, and the write-off of an investment in, HHL Financial Services, Inc. (HHL). The one-time charge included a revenue reversal of $2.2 million, a net decrease in operating margin of $8.7 million, a write-off of investment of $0.9 million, and a net tax benefit of $3.9 million. Exclusive of the third quarter revenue reversal for HHL, fiscal year 1996 revenue was $102.8 million, increasing 15% over fiscal year 1995. HMSY's fiscal year 1996 operating margin of $14.3 million produced an operating margin rate of 14%, and reflected a decrease of $3.8 million or 21% from fiscal year 1995. Exclusive of one-time charges for HHL, fiscal year 1996 operating margin of $23.1 million produced an operating margin rate of 22%. Net income for the year was $8.2 million. Exclusive of the one-time charge for HHL, and merger costs for CDR Associates, Inc., net income was $14.4 million in fiscal year 1996. Excluding merger costs for HCm, Inc. in fiscal year 1995, this represents an increase of $3.8 million or 35% over the prior year. The Company's performance for fiscal year 1996 resulted in earnings per share of $0.45, a decrease of 18% from the prior year. Excluding the revenue reversal, and all one-time charges from fiscal years 1996 and 1995, earnings per share in fiscal year 1996 increased from $0.61 to $0.79, an increase of 30% over the prior year. On November 25, 1996, the Company completed the acquisition of Quality Standards in Medicine, Inc. (QSM), a Boston-based company providing clinical quality management systems, for 260,000 shares of HMSY common stock. This transaction is being treated as a pooling of interests, is expected to be approximately $0.03 per share dilutive, and is included in HMSY's current fiscal year 1997 estimates. From a substantive vantage point, QSM adds clinical expertise critical to the Company's business model. Founded in 1986, QSM provides hospitals with sophisticated systems and consulting services to help define and measure the quality of care. QSM had 1995 revenue of $0.8 million, and is well positioned with clients in 13 states, the District of Columbia, and the United Kingdom. QSM will be combined with HCm, HMSY's decision support systems subsidiary. Paul J. Kerz, President and Chief Executive Officer, observed: "While HMSY's otherwise strong results for the year were tempered and obscured by adverse third and fourth quarter client-related events, we completed the year solidly profitable and with positive cash flow. In the fourth quarter, cash collections improved, days sales outstanding declined by a significant amount, and at the end of the quarter cash balances improved almost $10 million." Mr. Kerz continued, "At the time of our announcement of preliminary results, we believed it judicious to reaffirm our traditional target annual growth rate of 15-20% at both the top and bottom lines. Moreover, commenting on the need for sensitivity to the Company's comparatively small size, we realerted the investment community to variations in quarterly comparisons, while suggesting that several quarters of revenue consolidation lay ahead, with an orderly assumption of growth likely for later in the year." -1- 2 HEALTH MANAGEMENT SYSTEMS, INC. [HMS LOGO] 401 Park Avenue South New York, New York 10016 (212) 685-4545 (212) 857-5004 (fax) PRESS RELEASE Mr. Kerz concluded, "As is generally acknowledged, the transformations affecting health care and the transfer payment processes associated with health care reimbursement are profound. These changes impact patients, providers, and purchasers, and entail complex implications yet to be made manifest. Reformations of this scope predictably cause perturbations in the marketplace -- in turn affecting decision-making about engagements of increasing complexity and size. Yet, the overall theme is: increased complexity drives the need for more information, derived from expanded, increasingly granular, data sets. Thus, we see myriad opportunities for an information management company devoted to the utilization of innovative tools and processes for improving client revenue, profitability, quality, and cost-effectiveness. HMSY has realized value for its clients -- including many of the largest governmental, corporate, and not-for-profit institutions in the country -- for 22 years. We continue to work in close partnership with clients to develop and apply proprietary information management services and systems at the vanguard of change in the health care industry." HMSY furnishes proprietary information management and data processing services and software to hospitals and health care providers, government health services agencies, other payors or purchasers of health care, and companies serving the health care industry. The Company's offerings constitute an outsourcing of various aspects of the information processing functions associated with the health care transfer payment process, affording HMSY's clients the benefits of enhanced revenue (achieved through improved reimbursability and/or collectibility), accelerated cash flow, and reduced operating and administrative costs. This press release contains forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks include but are not limited to the ability of HMSY to grow internally or by acquisition and to integrate acquired businesses into the HMSY group of companies, changing conditions in the health care industry which could simplify the reimbursement process and adversely affect HMSY's business, government regulatory and political pressures which could reduce the rate of growth of health care expenditures, competitive actions by other companies, and other risks referred to in HMSY's registration statements and periodic reports filed with the Securities and Exchange Commission. -2- 3 HEALTH MANAGEMENT SYSTEMS, INC. [HMS LOGO] 401 Park Avenue South New York, New York 10016 (212) 685-4545 (212) 857-5004 (fax) Nasdaq: HMSY PRESS RELEASE CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except $ Per Share Amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED OCTOBER 31, OCTOBER 31, --------------------------- -------------------------- 1996 1995 1996 1995 --------- --------- -------- --------- (Unaudited) REVENUE................................................. $ 23,917 24,681 100,669 89,727 COST OF SERVICES Compensation.......................................... 11,239 11,798 48,564 43,373 Data processing....................................... 1,864 2,529 10,257 8,144 Occupancy............................................. 2,362 1,682 7,840 6,529 Other................................................. 3,291 3,609 19,660 13,581 --------- --------- -------- --------- 18,756 19,618 86,321 71,627 --------- --------- -------- --------- OPERATING MARGIN..................................... 5,161 5,063 14,348 18,100 Amortization of intangibles........................... 43 54 204 243 --------- --------- -------- --------- OPERATING INCOME..................................... 5,118 5,009 14,144 17,857 OTHER INCOME/EXPENSE Interest income...................................... 322 274 987 983 Merger related costs................................. (5) 0 (494) (1,045) Equity in (loss) earnings of affiliate............... (138) (11) 50 0 Loss on investment................................... 0 0 (927) 0 Other................................................ 0 5 0 (41) --------- --------- -------- --------- INCOME BEFORE INCOME TAX EXPENSE .................... 5,297 5,277 13,760 17,754 Income tax expense...................................... (2,365) (2,312) (5,574) (8,152) --------- --------- -------- --------- NET INCOME .......................................... $ 2,932 2,965 8,186 9,602 ========= ========= ======== ========= PER COMMON SHARE: Net income .......................................... $ 0.16 0.17 0.45 0.55 ========= ========= ======== ========= Weighted average shares outstanding.................. 18,328 17,659 18,289 17,407 ========= ========= ======== =========
CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands)
OCTOBER 31, OCTOBER 31, 1996 1995 ------------ ------------ ASSETS Cash and short-term investments...................... $ 39,455 30,088 Accounts receivable, net............................. 42,418 31,630 Property and equipment, net.......................... 7,774 5,874 Intangible assets, net............................... 5,257 5,461 Investment in affiliates............................. 6,824 7,673 Other................................................ 7,453 6,658 ------------ ------------ Total assets...................................... $ 109,181 87,384 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities.................................. $ 30,188 24,403 Other liabilities.................................... 2,407 1,739 Deferred income taxes................................ 57 2,018 ------------ ------------ Total liabilities................................. 32,652 28,160 ------------ ------------ Shareholders' equity................................. 76,529 59,224 ------------ ------------ Total liabilities and shareholders' equity........ $ 109,181 87,384 ============ ============
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