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): July 31, 1997
MEADOWBROOK REHABILITATION GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19726 94-3022377
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
2200 Powell Street, Suite 800, Emeryville, CA 94608
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
(510) 420-0900
Item 2. Acquisition or Disposition of Assets
On July 31, 1997, Meadowbrook Rehabilitation Group, Inc., a
Delaware corporation (the "Company"), sold the business and assets (other than
accounts receivable as of the closing) of Meadowbrook Neurocare-Kansas City,
Inc. (the "Subsidiary"), a wholly owned subsidiary of the Company, to NewCare
Hospital Corporation (the "Purchaser"), a wholly-owned subsidiary of NewCare
Health Corporation. The Subsidiary provided acute and subacute rehabilitation
services at a leased hospital in Gardner, Kansas. The hospital was leased from
Harvey Wm. Glasser, M.D., the Company's Chief Executive Officer and majority
shareholder. Concurrently with the sale of the assets of the Subsidiary, Dr.
Glasser sold the hospital leased by the Subsidiary to the Purchaser.
In consideration of the transfer of such business and assets
of the Subsidiary, the Company received $1,500,000 less the value of certain
liabilities of the Subsidiary assumed by the Purchaser. The selling price for
the business and assets of the Subsidiary was determined based on arms-length
negotiations between the parties. There was no material relationship between the
Purchaser and the Company or any of the Company's affiliates, any director or
officer of the Company or any associate of any such director or officer.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma financial information required pursuant to Article 11 of
Regulation S-X.
Thefollowing Pro Forma financial statements are included following
the signature page to this Form 8-K:
Introduction to the Pro Forma Condensed Consolidated financial
information.
Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1997, (unaudited).
Pro Forma Condensed Consolidated Statements of Income for the
twelve months ended June 30, 1996 and for the nine months ended
March 31, 1997, (unaudited).
Notes to Pro Forma Condensed Consolidated financial information
(unaudited).
(c) Exhibits:
Exhibit 2.1 Agreement of Purchase and Sale, dated June 18, 1997,
between NewCare Health Corporation and Meadowbrook Neurocare-Kansas
City, Inc. The Registrant agrees to furnish supplementally to the
Commission a copy of the omitted schedules.
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.
Dated: August 13, 1997.
MEADOWBROOK REHABILITATION
GROUP, INC.
By: /s/ Harvey Wm. Glasser, M.D.
Harvey Wm. Glasser, M.D.
President and Chief Executive Officer
Item 7(b) Meadowbrook Rehabilitation Group, Inc. reflecting the sale of
Meadowbrook Neurocare-Kansas City, Inc.
Introduction to unaudited Pro Forma Condensed Consolidated Financial
information.
The following tables set forth the unaudited Pro Forma Condensed
Consolidated Balance Sheet of the Company as of March 31, 1997, and
the unaudited Pro Forma Condensed Consolidated Statements of Income
of the Company for the twelve months ended June 30, 1996 and the
nine months ended March 31, 1997. The Pro Forma Condensed
Consolidated Statements of Income include adjustments related to the
sale of Meadowbrook Rehabilitation Group of Georgia, Inc. The
transaction closing date for the sale of Meadowbrook Rehabilitation
Group of Georgia, Inc. was March 31, 1997 and therefore the
Condensed Consolidated Balance Sheet reflects the disposition. The
Pro Forma Condensed Consolidated Balance Sheet was prepared assuming
that the Company's disposition of Meadowbrook Neurocare-Kansas City,
Inc. took place on March 31, 1997. The Pro Forma Condensed
Consolidated Statements of Income were prepared assuming that the
disposition of Meadowbrook Neurocare-Kansas City, Inc. and the
disposition of Meadowbrook Rehabilitation Group of Georgia, Inc.
took place as of the beginning of the twelve months ended June 30,
1996 and at the beginning of the nine months ended March 31, 1997,
respectively.
The unaudited financial information furnished herein reflects all
adjustments for the twelve months ended June 30, 1996 and the nine
months ended March 31, 1997, respectively, consisting only of normal
recurring adjustments which, in the opinion of management, are
necessary to fairly state the Company's financial position and the
results of its operations for the periods presented.
The unaudited pro forma financial information does not purport to
present the consolidated financial position and consolidated results
of operations of the Company had the Company's dispositions of
Meadowbrook Neurocare-Kansas City, Inc. and Meadowbrook
Rehabilitation Group of Georgia, Inc. actually occurred on the dates
indicated; nor does it purport to be indicative of results that will
be attained in the future.
The pro forma financial information should be read in conjunction
with the Company's historical Consolidated Financial Statements and
Notes thereto contained in the Company's From 10-K for the fiscal
year ended June 30, 1996 and the Company's Form 8-K dated March 31,
1997.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 1997
-----------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------
Actual Debit Credit Ref Pro Forma
---------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents $3,639,993 $1,500,000 (A) $5,139,993
Net patient accounts receivable 5,122,109 5,122,109
Due from intermediaries 9,630 9,630
Prepaid expenses and other assets 1,198,336 $2,410 (A) 1,195,926
-----------
Total current assets 9,970,068 11,467,658
-----------
PROPERTY AND EQUIPMENT, (net) 1,188,669 208,148 (A) 980,521
GOODWILL AND INTANGIBLE ASSETS 1,820,472 1,820,472
----------- -----------
TOTAL ASSETS $12,979,209 $14,268,651
=========== ===========
CURRENT LIABILITIES 3,550,872 146,000 (A) 3,696,872
LONG-TERM LIABILITIES 380,956 380,956
----------- -----------
Total Liabilities 3,931,828 4,077,828
----------- -----------
MINORITY INTEREST 0 0
STOCKHOLDERS' EQUITY
Common stock 19,302 19,302
Paid-in capital 17,908,122 17,908,122
Retained deficit (8,880,043) 1,143,442 (A) (7,736,601)
----------- -----------
Total stockholders' equity 9,047,381 10,190,823
----------- ---------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$12,979,209 $1,500,000 $1,500,000 $14,268,651
=========== ========== ========== ===========
<FN>
Footnotes on page 9.
</FN>
PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
Year Ended June 30, 1996
---------------------------------------------------------------------------------------------------
Georgia Pro Forma Kansas Pro Forma Adjustments
Adjustments
----------------------------- -----------------------------
Actual Debit Credit Ref Debit Credit Ref Pro Forma
---------------------------------------------------------------------------------------------
OPERATING REVENUES:
Net patient revenues $23,622,560 $6,068,071 $184,000 (E,F) $6,331,254 (B) $11,407,235
----------- -----------
Net operating revenues 23,622,560 11,407,235
----------- -----------
OPERATING EXPENSES:
Salaries and employee 15,189,173 4,204,456 (C,E) $3,387,295 (B,C) 7,597,422
benefits
Other operating expenses 9,108,509 1,847,827 (C,E) 2,255,209 (B,C) 5,005,473
----------- -----------
Total operating expenses 24,297,682 12,602,895
----------- -----------
Loss from operations (675,122) (1,195,660)
----------- -----------
OTHER (INCOME) EXPENSE:
Gain on sale of assets 0 0
Interest income (113,834) 65,000 (D) 75,000 (D) (253,834)
----------- -----------
Net other income (113,834) (253,834)
----------- -----------
Loss before income taxes (561,288) (941,826)
INCOME TAX PROVISION
(BENEFIT) 0 0
----------- -----------
NET LOSS BEFORE (941,826)
MINORITY INTEREST (561,288)
----------- -----------
MINORITY INTEREST 29,016 29,016
----------- ---------- ---------- ----------
NET LOSS $ (590,304) $6,068,071 $6,301,283 $6,331,254 $5,717,504 $(970,842)
=========== ========== ========== ==========
NET LOSS PER SHARE
(primary and fully diluted) ($0.31) ($0.50)
=========== ===========
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING 1,930,244 1,930,244
=========== ===========
<FN>
Footnotes on page 9.
</FN>
PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
Nine Months Ended March 31, 1997
----------------------------------------------------------------------------------------------
Georgia Pro Forma Kansas Pro Forma
Adjustments Adjustments
Actual Debit Credit Ref Debit Credit Ref Pro Forma
----------------------------------------------------------------------------------------------
OPERATING REVENUES:
Net patient revenues $17,013,035 $4,856,216 $138,000(E,F) $3,738,745 (B) $8,556,074
--------------- ----------
Net operating revenues 17,013,035 8,556,074
--------------- ----------
OPERATING EXPENSES:
Salaries and employee benefits 11,926,130 3,371,655(C,E) $2,552,610 (B,C) 6,001,865
Other operating expenses 6,668,417 1,291,786(C,E) 1,577,938 (B,C) 2,736,809
--------------- ----------
Total operating expenses 18,594,547 8,738,674
--------------- ----------
Loss from operations (1,581,512) (182,600)
--------------- ----------
OTHER (INCOME) EXPENSE:
Gain on sale of assets (530,942) 530,942
Interest income (38,184) 48,750(D) 56,250 (D) (143,184)
--------------- ----------
Net other income (569,126) 387,758
--------------- ----------
Loss before income taxes (1,012,386) (570,358)
----------
INCOME TAX PROVISION (BENEFIT)
0 0
--------------- ----------
NET LOSS BEFORE MINORITY
INTEREST (1,012,386) (570,358)
--------------- ----------
MINORITY INTEREST 26,660 26,660
--------------- ---------- ---------- ---------- ---------- ----------
NET LOSS $(1,039,046) $4,856,216 $4,850,191 $3,738,745 $4,186,798 $(597,018)
=============== ========== ========== ========== ========== ==========
NET LOSS PER SHARE (primary and
fully diluted) ($0.54) ($0.31)
=============== ==============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 1,930,349 1,930,349
=============== ==============
<FN>
Footnotes on page 9.
</FN>
Meadowbrook Rehabilitation Group, Inc.
Reflecting the Sale of Meadowbrook Neurocare-Kansas City, Inc.
Notes to Pro Forma Condensed Consolidated Financial Information
1. The amounts reflected in these notes are based on estimates which are
subject to change. The following pro forma adjustments were made to the
March 31, 1997 Condensed Consolidated Balance Sheet to reflect the sale
of Meadowbrook Neurocare-Kansas City, Inc. for cash.
(A) To record the sale of certain assets of Meadowbrook Neurocare-Kansas
City, Inc.
2. The following pro forma adjustments were made to the Condensed
Consolidated Statements of Income for the twelve months ended
June 30, 1996 and the nine months ended March 31, 1997.
(B) Elimination of all operating revenue and expenses for Meadowbrook
Neurocare-Kansas City, Inc.
(C) Estimated reduction of Corporate office salaries and wages and
operating expenses.
(D) Estimated increase in Meadowbrook Rehabilitation Group, Inc.'s interest
income due to higher cash balances.
(E) Elimination of all operating revenue and expenses for Meadowbrook
Rehabilitation Group of Georgia, Inc.
(F) Estimated increase in revenue due to increased Medicare reimbursement
based on higher overall Medicare utilization.