-----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, U/rgdpdgvjR++C0uA3zzGrDnyz+yq5rm9gYqv0lgeaQSqIR2Mv0hI0niQ57dVIst 3d47ym+wa5t6yWllTrXMzw== 0000950144-98-003116.txt : 19980325 0000950144-98-003116.hdr.sgml : 19980325 ACCESSION NUMBER: 0000950144-98-003116 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980320 ITEM INFORMATION: FILED AS OF DATE: 19980324 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHYCOR INC/TN CENTRAL INDEX KEY: 0000881400 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE [8011] IRS NUMBER: 621344801 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19786 FILM NUMBER: 98571378 BUSINESS ADDRESS: STREET 1: 30 BURTON HILLS BLVD STREET 2: STE 400 CITY: NASHVILLE STATE: TN ZIP: 37215 BUSINESS PHONE: 6156659066 MAIL ADDRESS: STREET 1: 30 BURTON HILLS BLVD STREET 2: STE 400 CITY: NASHVILLE STATE: TN ZIP: 37215 8-K 1 PHYCOR INC. FORM 8-K 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): March 21, 1998 ----------------------------------- PHYCOR, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Tennessee 0-19786 62-13344801 -------------- --------------- --------------- (State or Other (Commission File (I.R.S. Employer Jurisdiction of Number) Identification Incorporation) Number) 30 Burton Hills Boulevard Suite 400 Nashville, Tennessee 37015 ------------------------------------------------- (Address of principal executive offices) (Zip Code) (615) 665-9066 -------------------------------------------------- (Registrant's telephone number, including area code) Not applicable -------------- (Former name or former address, if changed since last report) ================================================================================ Page 1 of 8 pages 2 ITEM 5. OTHER EVENTS. In connection with the pending mergers of wholly-owned subsidiaries of PhyCor, Inc., a Tennessee corporation (the "Company"), with CareWise, Inc. and First Physician Care, Inc., and the acquisition of certain multi-specialty clinics, the Company plans to offer shares of the Company's Common Stock, no par value per share. In order to comply with the disclosure requirements of the Securities and Exchange Commission regarding the financial statements of businesses acquired or to be acquired, the Company is filing this Current Report containing pro forma financial statements. 2 3 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION The following unaudited Pro Forma Combined Balance Sheet as of September 30, 1997 and the related Pro Forma Combined Statements of Operations for the year ended December 31, 1996 and the nine months ended September 30, 1997 give effect to all acquisitions completed by PhyCor in 1996 and 1997 and the pending acquisition by PhyCor of two clinics and the pending mergers with CareWise, Inc. ("CareWise") and First Physicians Care, Inc. ("FPC") as if such transactions had been completed, with respect to the statements of operations, at the beginning of each of the periods presented, and, with respect to the balance sheet, as of September 30, 1997. The clinic acquisitions were or will be accounted for as purchases. The pending mergers with CareWise and FPC will be accounted for as a pooling-of-interests. The unaudited Pro Forma Combined Financial Information does not purport to present the financial position or results of operations of PhyCor had the mergers or the acquisitions taken place on the dates specified, nor are they necessarily indicative of the results of operations that may be achieved in the future. The information presented does not include certain cost savings that management believes may be realized following the mergers, currently estimated to total approximately $4.5 million annually. These savings are expected to be realized primarily through the elimination of duplicative corporate overhead and other expected synergies. There can be no assurance as to the amount of cost savings, if any, that may be realized as a result of the mergers. The unaudited Pro Forma Combined Financial Information should be read in conjunction with the separate historical financial statements of PhyCor, CareWise and FPC and notes thereto contained, or incorporated by reference, in the Registration Statement on Form S-4 (File No. 333-45017) filed with the Securities and Exchange Commission (the "Commission") in connection with the CareWise merger and the Registration Statement on Form S-4 (File No. 333-45209) filed with the Commission in connection with the FPC merger. 3 4 PHYCOR, INC. AND SUBSIDIARIES PRO FORMA COMBINED BALANCE SHEET SEPTEMBER 30, 1997 (UNAUDITED)
OTHER COMPLETED AND PENDING TRANSACTIONS ------------------------- ASSETS ACQUIRED EFFECTS OF AND ACQUISITION PRO FORMA PHYCOR LIABILITIES AND RELATED PRO FORMA CAREWISE COMBINED HISTORICAL ASSUMED FINANCINGS SUBTOTALS HISTORICAL TOTALS ---------- ----------- ----------- ---------- ----------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Current assets: Cash and cash equivalents......... $ 37,534 $ 3,993 $ -- $ 41,527 $ 6,478 $ 48,005 Accounts receivable, net.......... 373,315 33,049 -- 406,364 1,223 407,587 Other current assets.............. 68,012 4,785 -- 72,797 1,271 74,068 ---------- ------- ------- ---------- ------- ---------- Total current assets....... 478,861 41,827 -- 520,688 8,972 529,660 ---------- ------- ------- ---------- ------- ---------- Property and equipment, net......... 217,992 19,345 -- 237,337 2,189 239,526 Intangible assets................... 772,858 14,651 72,528 860,037 -- 860,037 Other assets........................ 32,299 2,187 -- 34,486 56 34,542 ---------- ------- ------- ---------- ------- ---------- Total assets............... $1,502,010 $78,010 $72,528 $1,652,548 $11,217 $1,663,765 ========== ======= ======= ========== ======= ========== Current liabilities: Current installments of long-term debt............................ $ 4,630 $ 3,125 $ -- $ 7,755 $ 562 $ 8,317 Accounts payable.................. 34,084 7,929 -- 42,013 383 42,396 Other current liabilities......... 204,986 13,009 10,000 227,995 4,280 232,275 ---------- ------- ------- ---------- ------- ---------- Total current liabilities.............. 243,700 24,063 10,000 277,763 5,225 282,988 ---------- ------- ------- ---------- ------- ---------- Long-term debt, excluding current installments...................... 141,122 21,297 36,891 199,310 -- 199,310 Other long-term liabilities......... 102,444 1,833 35,619 139,896 729 140,625 Convertible subordinated notes payable to physician groups....... 70,481 -- 1,749 72,230 -- 72,230 Convertible subordinated debentures........................ 200,000 -- -- 200,000 -- 200,000 ---------- ------- ------- ---------- ------- ---------- Total liabilities.......... 757,747 47,193 84,259 889,199 5,954 895,153 Shareholders' equity................ 744,263 18,961 125 763,349 5,263 768,612 ---------- ------- ------- ---------- ------- ---------- Total liabilities and shareholders' equity..... $1,502,010 $66,154 $84,384 $1,652,548 $11,217 $1,663,765 ========== ======= ======= ========== ======= ==========
See accompanying notes to pro forma financial information. 4 5 PHYCOR, INC. AND SUBSIDIARIES PRO FORMA COMBINED STATEMENTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
1997 AND PRO FORMA PRO FORMA PHYCOR PENDING COMBINED CAREWISE COMBINED HISTORICAL TRANSACTIONS SUBTOTALS HISTORICAL TOTALS ---------- ------------- ---------- ----------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenue............................... $ 802,297 $210,368 $1,012,665 $10,715 $1,023,380 Direct clinic expenses.................... 576,480 171,022 747,502 -- 747,502 Non-clinic goods and services............. -- -- -- 7,481 7,481 General corporate expenses................ 19,768 3,439 23,207 3,722 26,929 Rents and lease expense................... 71,376 14,098 85,474 -- 85,474 Depreciation and amortization............. 44,618 9,626 54,244 -- 54,244 ---------- -------- ---------- ------- ---------- Net operating expenses.................. 712,242 198,185 910,427 11,203 921,630 ---------- -------- ---------- ------- ---------- Earnings from operations................ 90,055 12,183 102,238 (488) 101,750 Interest expense, net..................... 14,334 4,306 18,640 (81) 18,559 Minority interest in earnings of consolidated partnerships............... 8,739 -- 8,739 -- 8,739 ---------- -------- ---------- ------- ---------- Earnings (loss) before income taxes..... 66,982 7,877 74,859 (407) 74,452 Income tax expense........................ 25,929 3,049 28,978 -- 28,978 ---------- -------- ---------- ------- ---------- Net earnings (loss)..................... $ 41,053 $ 4,828 $ 45,881 $ (407) 45,474 ========== ======== ========== ======= ========== Earnings (loss) per common share.......... $ 0.61 $ 0.65 $ (0.15) $ 0.62 ========== ========== ======= ========== Weighted average number of shares and share equivalents outstanding........... 66,853 70,125 2,668 72,793 ========== ========== ======= ==========
See accompanying notes to pro forma financial information. 5 6 PHYCOR, INC. AND SUBSIDIARIES PRO FORMA COMBINED STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
1996 AND 1997 AND PRO FORMA PRO FORMA PHYCOR PENDING COMBINED CAREWISE COMBINED HISTORICAL TRANSACTIONS SUBTOTALS HISTORICAL TOTALS ---------- ------------ ---------- ----------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenue.................................. $ 766,325 $436,100 $1,202,425 $ 9,175 $1,211,600 Direct clinic expenses....................... 557,719 336,377 894,096 -- 894,096 Non-clinic goods and services................ -- -- -- 7,265 7,265 General corporate expenses................... 21,115 5,095 26,210 5,387 31,597 Rents and lease expense...................... 65,577 39,325 104,902 -- 104,902 Depreciation and amortization................ 40,182 20,914 61,096 -- 61,096 ---------- -------- ---------- ------- ---------- Net operating expenses..................... 684,593 401,711 1,086,304 12,652 1,098,956 ---------- -------- ---------- ------- ---------- Earnings (loss) from operations............ 81,732 34,389 116,121 (3,477) 112,644 Interest expense, net........................ 12,114 16,104 28,218 417 28,635 Minority interest in earnings of consolidated partnerships............................... 10,463 -- 10,463 -- 10,463 ---------- -------- ---------- ------- ---------- Earnings (loss) before income taxes........ 59,155 18,285 77,440 (3,894) 73,546 Income tax expense........................... 22,775 7,039 29,814 -- 29,814 ---------- -------- ---------- ------- ---------- Net earnings (loss)........................ $ 36,380 $ 11,246 $ 47,626 $(3,894) $ 43,732 ========== ======== ========== ======= ========== Earnings (loss) per common share............. $ 0.60 $ .75 $ (1.50) $ 0.66 ========== ========== ======= ========== Weighted average number of shares and share equivalents outstanding.................... 61,096 63,520 2,590 66,110 ========== ========== ======= ==========
See accompanying notes to pro forma financial information. 6 7 NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION The unaudited Pro Forma Combined Financial Information does not purport to present the financial position or results of operations of PhyCor had the mergers or the acquisitions taken place on the dates specified, nor are they necessarily indicative of the results of operations that may be achieved in the future. The unaudited Pro Forma Combined Financial Information has been prepared under the assumptions set forth in the following notes. During 1996, PhyCor acquired certain assets of 13 multi-specialty clinics, an IPA management company and certain assets of an associated IPA. During the nine months ended September 30, 1997, PhyCor affiliated with seven multi-specialty clinics and completed its merger with Straub Clinic & Hospital, Incorporated. Since September 30, 1997, PhyCor has acquired certain assets of four multi-specialty clinics and has reached agreements in principle to merge with CareWise and FPC and to acquire two additional clinics. PRO FORMA COMBINED BALANCE SHEET The adjustments reflected in the Pro Forma Combined Balance Sheet are to reflect the value of assets acquired and liabilities assumed in connection with PhyCor transactions completed after September 30, 1997, and other pending acquisitions by PhyCor. The adjustments reflect the effects of related borrowings, the issuance of PhyCor Common Stock and subordinated convertible notes, and the recording of the intangible assets acquired. PRO FORMA COMBINED STATEMENTS OF OPERATIONS Certain amounts in the historical columns have been combined and reclassified in order to conform to the PhyCor presentation. Nonrecurring expenses expected to be incurred in connection with the pending mergers are not included in the Pro Forma Combined Statements of Operations. The amount of such expenses cannot yet be determined but is expected to be typical in relation to the size of the pending mergers. Interest on acquisition-related borrowings was calculated at an annual rate of 6.5%. Intangible assets representing PhyCor's cost of obtaining clinic service agreements are amortized over a period of 40 years. Estimated federal and state income taxes are recorded at a combined rate of 38.5% in 1996 and 38.8% in 1997. 7 8 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. PHYCOR, INC. By: /s/ John K. Crawford --------------------------------------- John K. Crawford Executive Vice President and Chief Financial Officer Date: March 21, 1998 -----END PRIVACY-ENHANCED MESSAGE-----