-----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, MPOQhupyfepJ83KSsZa22WYLnmQNKHcWc0zTDCQftjx9jEC7QpYFiA8hRfPJ70BG qSfJRrm1aLzuMj32Uo6bTg== 0000950109-96-006156.txt : 19960925 0000950109-96-006156.hdr.sgml : 19960925 ACCESSION NUMBER: 0000950109-96-006156 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960318 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960924 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUIMED INC CENTRAL INDEX KEY: 0000892493 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 251668112 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12578 FILM NUMBER: 96633706 BUSINESS ADDRESS: STREET 1: 3754 LAVISTA RD CITY: TUCKER STATE: GA ZIP: 30084 BUSINESS PHONE: 4043206211 FORMER COMPANY: FORMER CONFORMED NAME: EQUIVISION INC DATE OF NAME CHANGE: 19930804 8-K 1 FORM 8-K 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): March 18, 1996 ----------------------- EQUIMED, INC. - ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 0-27456 25-1668112 - ------------------------------------------------------------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 3754 LaVista Rd. Tucker, Georgia 30084-5637 - ------------------------ ------------------------ (Address of principal (Zip Code) executive offices) (404) 320-6211 - ------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - ------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5: OTHER EVENTS On March 18, 1996, EquiMed, Inc. ("EquiMed" or the "Company") consummated mergers with each of (i) Wallace Eye Surgery, Inc., formerly known as Wallace Eye Surgery, Ltd., (the "Wallace Practice") and (ii) Laser & Surgery, Inc. (the "Surgery Center"). The Wallace Practice and Surgery Center are located in Alexandria, Louisiana. The Wallace Practice provides diagnostic services and treatment for ophthalmic patients. The Surgery Center provides ophthalmic surgical care, including cataract surgery and other laser procedures for cataract, retina and glaucoma. The common stock of the Wallace Practice and the Surgery Center are wholly owned by R. Bruce Wallace, III, M. D. The two mergers were effective as of March 1, 1996. Consideration for the acquisition consisted of approximately 403,000 shares of EquiMed common stock valued at approximately $5,000,000. The business combination was accounted for as a pooling of interests. On April 11, 1996, EquiMed consummated mergers with (i) E. Ronald Salvitti, M.D., Inc. ( the "Salvitti Practice") and (ii) Washington Optical, Inc. (the "Optical Shop"). The Salvitti Practice and Optical Shop are located in Washington, Pennsylvania. The Salvitti Practice provides diagnostic services and treatment for ophthalmic patients and also includes an ambulatory surgery center which provides opthalmic surgical care, including cataract surgery and other laser procedures for cataract, retina and glaucoma. The Optical Shop primarily sells prescription eyeglasses and contact lenses. The common stock of the Salvitti Practice and the Optical Shop are wholly owned by E. Ronald Salvitti, M. D. The two mergers were effective as of April 1, 1996. Consideration for the acquisition consisted of $45,000 in cash (net of cash acquired and transaction costs), $9,115,000 in EquiMed common stock, $225,000 in assumed debt and $259,000 in assumed liabilities. The business combination was accounted for as a purchase, with the acquired assets being recorded at their respective market values. The financial statements and pro forma financial information relating to these acquisitions contained in Item 7 are being filed to comply with Rule 3- 05.(b)(i) of Regulation S-X in contemplation of the filing of a registration statement under the Securities Act of 1933. Such financial statements and pro forma financial information would not otherwise be required to be filed. 1 ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired The combined financial statements of E. Ronald Salvitti, M.D., Inc., Washington, Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. (collectively referred to as the "Salvitti and Wallace" or "Companies"), including the combined balance sheet as of December 31, 1995, and the related combined statements of operation and shareholders' equity, and cash flow for the year ended, including the report of independent auditors. Unaudited combined condensed statements of operations and cash flow of E. Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. (collectively referred to as "Salvitti") for the three months ended March 31, 1996. 2 Report of Independent Auditors The Boards of Directors E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc. Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. We have audited the accompanying combined balance sheet of E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. (collectively referred to as the "Companies") as of December 31, 1995 and the related combined statements of operations and shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Companies' management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of the Companies at December 31, 1995 and the combined results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Atlanta, Georgia June 12, 1996 3 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Combined Balance Sheet December 31, 1995 ASSETS Current assets: Cash $ 53,565 Marketable securities -- available-for-sale 210,810 Accounts receivable -- less allowance for doubtful accounts of $115,000 943,307 Other current assets 51,817 ---------- Total current assets 1,259,499 Property and equipment, at cost: Furniture and fixtures 498,646 Equipment 2,335,393 Leasehold improvements and other 546,833 ---------- 3,380,872 Less accumulated depreciation 2,758,854 ---------- Net property and equipment 622,018 Notes receivable 65,833 Other assets 3,593 ---------- Total assets $1,950,943 ==========
4 E. Ronald Salvitti, M.D., Inc. Washington Optical, Inc. Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Combined Balance Sheet December 31, 1995 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 206,885 Accrued salaries and benefits 231,566 Deferred income taxes 195,575 Accrued contractual fees payable 115,635 Other accrued liabilities 19,167 Note payable to related party 225,000 Line of credit 77,467 Current portion of long-term debt 79,168 ---------- Total current liabilities 1,150,463 Long-term debt 96,072 Shareholders' equity: Common stock -- E. Ronald Salvitti, M.D., Inc., no par value, 1,000 shares authorized, 500 shares issued and outstanding 17,384 Common stock -- Washington Optical, Inc. no par value, 1,000 shares authorized, 500 shares issued and outstanding 500 Common stock -- Wallace Eye Surgery, Ltd., no par value, 1,000 shares authorized, 500 shares issued and outstanding 10,047 Common stock -- The Laser Surgery & Center, Inc., no par value, 1,000 shares authorized, 100 shares issued and outstanding 1,000 Retained earnings 675,477 ---------- Total shareholders' equity 704,408 ---------- Total liabilities and shareholders' equity $1,950,943 ==========
See accompanying notes. 5 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Combined Statement of Operations December 31, 1995
Net revenues $10,444,389 Costs and Expenses: Professional fees and expenses 6,717,392 Treatment and support services 2,890,898 General and administrative expenses 452,170 Depreciation and amortization 346,539 Interest expense, net 47,683 Other income, net (868) ----------- Total costs and expenses 10,453,814 Loss before income taxes (9,425) Benefit for income taxes 9,425 ----------- Net income $ -- ===========
See accompanying notes. 6 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Combined Statement of Shareholders' Equity
COMMON RETAINED TOTAL STOCK EARNINGS EQUITY -------------------------------- Balance at December 31, 1994 $28,931 $733,647 $762,578 Net income - - - Dividends - (76,073) (76,073) Adjustment to unrealized gains on available-for-sale securities, net of tax - 17,903 17,903 -------------------------------- Balance at December 31, 1995 $28,931 $675,477 $704,408 ================================
See accompanying notes. 7 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., The Laser & Surgery Center, Inc. Combined Statement of Cash Flows December 31, 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ -- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 346,539 Loss on disposal of assets 48,593 Deferred income taxes (9,425) Changes in operating assets and liabilities: Accounts receivable 97,336 Other current assets (5,308) Accounts payable (56,125) Accrued salaries and benefits 1,829 Accrued contractual fees (266,242) Other accrued expenses 63 --------- Net cash provided by operating activities 157,260 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (183,704) Proceeds from disposal of property and equipment 21,309 Purchase of marketable securities (1,955) Payments on notes receivable 4,353 Decrease in other assets 2,245 --------- Net cash used by investing activities (157,752) CASH FLOWS FROM FINANCING ACTIVITIES Payments of long-term debt (21,117) Payments on note payable to shareholder (151,198) Payments of dividends (76,073) --------- Net cash used by financing activities (248,388) --------- Decrease in cash (248,880) Cash -- beginning of the year 302,445 --------- Cash -- end of the year $ 53,565 =========
See accompanying notes. 8 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements December 31, 1995 1. DESCRIPTION OF BUSINESS E. Ronald Salvitti, M.D., Inc. (the "Salvitti Clinic and Salvitti Surgical Center") provides diagnostic services and treatment for ophthalmic patients as well as ophthalmic surgical care, including cataract surgery, laser procedures for secondary cataracts, and radial keratatomy procedures. Washington Optical, Inc. (the "Optical Shop") provides frames and lenses for ophthalmic patients. The Salvitti Clinic, Salvitti Surgical Center, and Optical Shop are collectively referred to as the Salvitti Companies. The Salvitti Companies are under common ownership, and were acquired by EquiMed, Inc. on April 1, 1996. This acquisition was recorded by EquiMed, Inc. using the purchase method of accounting. Wallace Eye Surgery, Ltd. (the "Wallace Clinic") provides diagnostic services and treatment for ophthalmic patients in Alexandria, Louisiana. The Laser & Surgery Center, Inc. (the "Wallace Surgical Center") provides ophthalmic surgical care, including cataract surgery, laser procedures for secondary cataracts, and radial keratotomy procedures. Revenues of the Wallace Surgical Center are principally derived from patients of the Wallace Clinic. The Wallace Clinic and Wallace Surgical Center are collectively referred to as the Wallace Companies. The Wallace Companies are under common ownership, and were acquired by EquiMed, Inc. on March 16, 1996. This acquisition was accounted for by EquiMed, Inc. using the pooling of interests method of accounting. The Salvitti Companies and the Wallace Companies are collectively referred to as the Companies. 9 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The Companies' accounting records are maintained on the basis of cash receipts and disbursements for income-tax purposes. The accompanying combined financial statements have been prepared on the accrual basis and thus reflect accounts receivable, prepaid expenses, and liabilities that are not recorded in the accounting records. In addition, the combined financial statements do not reflect any adjustments that may result from the acquisitions by EquiMed, Inc. MARKETABLE SECURITIES - AVAILABLE-FOR-SALE Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. Realized gains and losses and declines in value judged to be other- than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on available-for-sale securities are included in investment income. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. 10 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NET REVENUES Net revenues consist primarily of diagnostic and treatment procedures fees including surgical care for ophthalmic patients. Facility fees charged by the Salvitti and Wallace Surgical Centers include all charges for the examination room, supplies, and use of equipment. Payments for services rendered to patients covered by Medicare, Medicaid and certain managed care organizations are generally less than billed charges. Provisions for contractual adjustments are made to reduce the charges to these patients to estimated receipts based upon the programs' principles of payment. Contractual provisions are deducted to arrive at net revenue. The following represents amounts included in the determination of net revenues for the year ended December 31, 1995:
Gross revenues $20,460,704 Less provision for contractual adjustments 10,016,315 ----------- Net revenues $10,444,389 ===========
The Companies derived approximately 52% of the above gross revenues from services provided under the Medicare program. In the ordinary course of business, the Companies render services in its facilities to patients who are financially unable to pay for services. The Companies have insignificant amounts of services that are identified as charity care. 11 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets for financial reporting purposes. CONCENTRATION OF CREDIT RISK The Companies' principal financial instrument subject to potential concentration of credit risk is trade accounts receivable for which the Companies do not generally require collateral. The concentration of credit risk with respect to trade accounts receivable is limited due to the number of payors and their dispersion across different insurance companies, individuals and geographic locations. Substantially all accounts receivable at December 31, 1995 are due from third party payors. INCOME TAXES The Companies account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". 12 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 3. INVESTMENTS The following is a summary of available-for-sale securities as of December 31, 1995:
GROSS GROSS UNREALIZED UNREALIZED ESTIMATED COST GAINS LOSSES FAIR VALUE ----------------------------------------------------- U.S. Corporate Securities $166,726 $10,652 $ - $177,378 Other Equity Securities 33,028 404 - 33,432 ---------------------------------------------------- $199,754 $11,056 $ - $210,810 =====================================================
The gross realized gains on sales of available-for-sale securities totaled $3,200. The net adjustment to unrealized holding gains on available-for-sale securities included as a component of shareholder's equity totaled $28,903. 4. LINE OF CREDIT On April 28, 1995, the Companies obtained a line of credit with a bank that provides for total borrowings up to $150,000. Borrowings under this agreement bear interest at prime plus 1% (9.25% at December 31, 1995). The line of credit is secured by certain medical equipment and has been guaranteed by the Wallace Companies' principal shareholder. At December 31, 1995, the Companies had borrowings of $77,467 outstanding under this agreement. 13 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 5. LONG-TERM DEBT OBLIGATIONS Long-term debt obligations consist of the following at December 31, 1995:
Notes payable to an institutional lender, bearing interest at 7.5%, payable $1,063 per month through September 1997 $ 20,850 Notes payable to an institutional lender, bearing interest at 9.2%, payable $5,596 per month through April 1998 134,439 Notes payable to an institutional lender, bearing interest at 8.5%, payable $540 per month through June 1998 14,951 Other 5,000 ---------- 175,240 Less current portion 79,168 ---------- $ 96,072 ==========
Aggregate annual maturities of long-term debt at December 31, 1995 are:
1996 $ 79,168 1997 77,841 1998 18,231 ---------- $175,240 ==========
Interest paid during 1995 was $49,016. 14 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 6. OPERATING LEASES The Companies lease property and equipment under operating lease agreements. Rent expense under these agreements totaled approximately $365,000 in 1995 including the leases with related parties described in Note 8. Future minimum lease payments are as follows:
1996 $ 330,056 1997 330,056 1998 330,056 1999 330,056 2000 289,369 Thereafter 1,255,840 ---------- Total future minimum lease payments $2,865,433 ==========
7. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities of the Companies for financial reporting purposes and the amounts used for income tax purposes. The temporary differences giving rise to significant portions of deferred tax assets and liabilities primarily relate to tax over book depreciation and the cash basis versus the accrual basis of accounting. 15 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 7. INCOME TAXES (CONTINUED) Deferred tax assets and liabilities at December 31, 1995 are: Deferred tax assets: Accounts payable $ 82,754 Accrued contractuals payable 99,169 Property and equipment 16,689 Accrued salaries 2,810 Valuation allowance (10,422) ---------- Total deferred tax assets 191,000 Deferred tax liabilities: Accounts receivable 377,849 Unrealized gain on marketable securities 4,442 Prepaids and others 4,284 ---------- Total deferred tax liabilities 386,575 ---------- Net deferred tax liability $195,575 ==========
Income taxes paid during 1995 was approximately $10,000. 8. RELATED PARTY TRANSACTIONS The Companies lease on a month to month basis office space from shareholders of the Companies. Rent expense under these leases was approximately $255,000 in 1995. The Companies borrowed funds approximating $630,000 in 1988 for improvement of a surgery center and purchase of medical equipment. The note payable was paid off in 1995. 16 E. Ronald Salvitti, M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery Center, Inc. Notes to Combined Financial Statements (continued) 8. RELATED PARTY TRANSACTIONS (CONTINUED) At December 31, 1995, the Companies had outstanding a promissory note in the amount of $225,000 to RBW Properties Limited Partnership, a related party. The note bears interest at 7% and is due in total on or before December 31, 1996. 9. PROFESSIONAL AND LIABILITY RISKS The Salvitti Companies are insured with respect to medical malpractice risks on an occurrence basis. The insurance contracts specify that coverage is available only during the term of each insurance contract. Management is not aware of any claims which might have a material impact on the Salvitti Companies' combined financial position. The Wallace Companies are insured with respect to medical malpractice risks on a claims-made basis. The insurance contracts specify that coverage is available only during the term of each insurance contract. Management is not aware of any claims which might have a material impact on the Companies' combined financial position. 10. SUBSEQUENT EVENTS The Salvitti Companies drew approximately $225,000 on a working capital loan with a bank in March 1996. On March 16, 1996, the Wallace Companies entered into an agreement to be acquired by EquiMed, Inc., a national physician practice management company. On April 1, 1996, the Salvitti Companies entered into an agreement to be acquired by EquiMed, Inc., a national physician practice management company. 17 E. Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. Condensed Combined Statements of Operations Three months ended March 31, 1996 (Unaudited)
Net revenues $1,566,626 Costs and Expenses: Professional fees and expenses 1,168,733 Treatment and support services 331,676 General and administrative expenses 66,209 Depreciation and amortization 25,000 Other income, net (22,763) ------------ Total costs and expenses 1,568,855 Loss before income taxes (2,229) Benefit for income taxes 2,229 ------------ Net income $ -- ============
See accompanying note to condensed combined financial statements 18 E. Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. Combined Condensed Statement of Cash Flows Three Months Ended March 31, 1996 (Unaudited)
Cash flows from operating activities $ 193,327 Cash flows from investing activities 200,800 Cash flows from financing activities (210,810) --------- Net increase in cash 183,317 Cash at beginning of period 1,683 --------- Cash at end of period $ 185,000 =========
See accompanying note to condensed financial statements 19 E. Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. Notes to Condensed Combined Financial Statements (Unaudited) March 31, 1996 1. Basis of Presentation The accompanying unaudited condensed combined financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. 20 (b) Pro Forma Financial Information EQUIMED, INC. UNAUDITED PRO FORMA FINANCIAL INFORMATION On March 18, 1996, the Company acquired Wallace Eye Surgery, Inc. and Laser & Surgery, Inc. (the "Wallace Acquisition"), which was accounted for by the pooling of interests method. Because this acquisition was not material, the Company's historical finacial statements, share and per share amounts have not been restated to included the accounts and results of operations for all periods prior to January 1, 1996. Effective April 1, 1996, the Company consummated mergers with E. Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. (the "Salvitti Acquisition"), which were accounted for as a purchase as of April 1, 1996. The following unaudited pro forma statement of operations for the year ended December 31, 1995 has been prepared to reflect the Company's results of operations to give effect to the Wallace Acquisition and Salvitti Acquisition, as if such acquisitions had been consummated as of January 1, 1995. The unaudited pro forma statement of operations for the six month period ended June 30, 1996 has been prepared to reflect the Salvitti Acquisition as if such acquisition had been consummated on January 1, 1996. The results of operations of the Wallace Eye Surgery, Inc. and Laser & Eye, Inc. for the six month period ended June 30, 1996 are included in the Company's results of operations for the same period. These pro forma statements do not necessarily reflect the results of operations as they would have been if the Company had completed the acquistions on the dates indicated above. This unaudited pro forma financial information should be read in conjunction with the separate financial statements and notes of EquiMed, the Companies, and Salvitti. The Company's most recently filed balance sheet is as of June 30, 1996 and is subsequent to the dates of the Wallace Acquisition and Salvitti Acquisition. Accordingly, an unaudited pro forma combined balance sheet as of June 30, 1996 is not presented. 21 EQUIMED, INC. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SALVITTI EQUIMED, AND PRO FORMA INC. WALLACE ADJUSTMENTS PRO FORMA ----------- ---------- ----------- ----------- Net revenue $ 58,884 $ 10,444 $ - $ 69,328 Costs and Expenses: Professional fees and expenses 15,054 6,717 (2,612)(A) 19,159 Treatment and support services 18,120 2,891 - 21,011 General and administrative expenses 7,383 452 - 7,835 Depreciation and amortization 2,682 346 182 (B) 3,210 Interest expense 2,849 48 - 2,897 Other incomes, net (637) (1) - (638) ---------- -------- --------- --------- Total costs and expenses 45,451 10,453 (2,430) 53,474 Income (loss) before income taxes and minority interest 13,433 (9) 2,430 15,854 Minority interest 831 - - 831 ---------- -------- --------- --------- Income (loss) before income taxes 12,602 (9) 2,430 15,023 Provision (benefit) for income taxes 2,404 (9) 1,045 3,440 ---------- -------- --------- --------- Net income $ 10,198 $ - $ 1,385 $ 11,583 ========== ======== ========= ========= Supplemental unaudited pro forma information: Net income, as above 10,198 - 1,385 11,583 Pro forma adjustment to income tax expense 3,391 - - 3,391 ---------- -------- --------- --------- Pro forma net income $ 6,807 $ - $ 1,385 $ 8,192 ========== ======== ========= ========= Pro forma net income per share $ 0.33 $ 0.37 ========== ========= Weighted average common shares and equivalents 20,784 1,110 21,894 ========== ========= =========
22 EQUIMED, INC. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
EQUIMED, PRO FORMA INC. SALVITTI ADJUSTMENTS PRO FORMA ---------- ---------- ------------- ------------ Net revenue $ 50,142 $ 1,567 $ - $ 51,709 Costs and Expenses: Professional fees and expenses 13,261 1,169 (473)(A) 13,957 Treatment and support services 18,579 332 - 18,911 General and administrative expenses 5,875 66 - 5,941 Depreciation and amortization 3,068 25 46 (B) 3,139 Interest expense 1,717 - - 1,717 Other incomes, net (280) (23) - (303) --------- -------- --------- --------- Total costs and expenses 42,220 1,569 (427) 43,362 Income (loss) before income taxes and minority interest 7,922 (2) 427 8,347 Minority interest 281 - - 281 --------- -------- --------- --------- Income (loss) before income taxes and extraordinary item 7,641 (2) 427 8,066 Provision (benefit) for income taxes 4,422 (2) 189 4,609 --------- -------- --------- --------- Income before extraordinary item $ 3,219 $ - $ 238 $ 3,457 ========= ======== ========= ========= Net income per share $ 0.12 $ 0.13 ========= ========= Weighted average common shares and equivalents 26,867 177 27,044 ========= ========= =========
23 EQUIMED, INC. NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (A) Reflects an adjustment in physician fees and expenses from those earned prior to acquisition, to physician fees and expenses earned pursuant to the terms of new compensation agreements entered into with EquiMed, Inc. at the time of acquisition. Prior to acquisition, professional fees and expenses represent the difference between center net revenues and center operating expenses, depreciation and amortization and interest expense. Subsequent to acquisition, physicians are typically compensated on either a percentage of professional fees generated or the profitability of an individual center. (B) Reflects an adjustment in depreciation and amortization expense arising from the acquisition of the center by EquiMed based upon an allocation of the acquisition purchase price. Depreciation for property and equipment is being computed for a period of 5-6 years. Amortization of patient records and service agreements is being computed for periods of ten and 40 years, respectively. 24 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. EQUIMED, INC. ------------------------------------ (Registrant) September 24, 1996 /s/ William E. Pritts II ------------------------------------ William E. Pritts II Chief Financial Officer 25 -----END PRIVACY-ENHANCED MESSAGE-----