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) February 28, 1998
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GENTLE DENTAL SERVICE CORPORATION
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(Exact name of registrant as specified in its charter)
Washington 000-23673 91-1577891
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
22800 Savi Ranch Parkway, Suite 206, Yorba Linda, CA 92887
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(Address of principal executive offices) (Zip Code)
(714) 998-0587
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address and former fiscal year,
if changed since last report)
Item 2. Acquisition or Disposition of Assets
On February 28, 1998, Gentle Dental Service Corporation (the "Company")
completed the acquisition of substantially all of the assets of Affordable
Dental Care, Inc. ("ADC"), a provider of dental care in western Oregon. The ADC
operations have 19 dentists in 9 offices in the Willamette Valley and
southwestern Oregon. All of ADC's offices are outside of the Portland
metropolitan area, where the Company currently provides dental practice
management services to 13 offices. In addition, the Company has entered into a
definitive agreement to acquire all of the outstanding stock of Managed Dental
Care of Oregon, Inc. ("MDCO"), a dental care organization which has an annually
renewable contract with the state of Oregon to provide care under the Oregon
Health Plan. MDCO in turn contracts with dental care providers, including ADC,
to provide dental care to Oregon Health Plan participants. The acquisition of
MDCO is subject to Oregon State regulatory approval.
The purchase price paid at closing for ADC's assets consisted of
$7,574,600 in cash. The purchase price to be paid at closing for the stock of
MDCO will consist of $950,000 in cash. In addition, the Company has agreed to
make cash earnout payments equal to .66 times the combined EBITDA of the
acquired businesses for the first 12 months following the ADC closing, .67 times
such EBITDA for the second 12 months following the ADC closing, and .67 times
such EBITDA for the third 12 months following the ADC closing. The cash paid at
closing was borrowed under the Company's credit facility with Imperial Bank.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Audited Combined Balance Sheets of ADC and MDCO as of December
31, 1996 and 1997, and related audited Combined Statements of
Operations, Stockholders' Equity and Cash Flows of ADC and MDCO
for the years ended December 31, 1996 and 1997.
The foregoing financial statements are not included in this
report and will be filed by amendment to this report on or before
May 15, 1998.
(b) Pro forma financial information. Pro forma Balance Sheet as of
December 31, 1997 and pro forma Statement of Operations for the
year ended December 31, 1997.
The foregoing pro forma financial statements are not included in
this report and will be filed by amendment to this report on or
before May 15, 1998.
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(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of February 28, 1998,
between the Company and Affordable Dental Care, Inc.
2.2 Stock Purchase Agreement, dated as of February 28, 1998,
between the Company and the sole shareholder of Managed
Dental Care of Oregon, Inc.
SIGNATURE
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: March 13, 1998
GENTLE DENTAL SERVICE CORPORATION
By NORMAN R. HUFFAKER
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Norman R. Huffaker,
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
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2.1 Asset Purchase Agreement, dated as of February 28, 1998, between
the Company and Affordable Dental Care, Inc.
The following exhibits and schedules to the Asset Purchase
Agreement have been omitted and will be provided to the Securities
and Exchange Commission upon request:
Exhibit A Assumption Agreement
Exhibit B Assignment and Bill of Sale to GDSC
Exhibit C Assignment to Professional Corporation
Exhibit D Restated MDCO Contract
Exhibit E Agreement Regarding New Offices
Exhibit F Employment Agreement
Exhibit G-1 Lease of Corvallis Dental Office
Exhibit G-2 Lease of Newberg Administrative Office
Exhibit H Opinion of ADC's Counsel
Exhibit I Opinion of GDSC's Counsel
Schedule 1.02-2 Excluded Assets
Schedule 1.10 Purchase Price Allocation
Schedule 3.04 Litigation
Schedule 3.06-2 Employee Benefits
Schedule 3.06-3 Employment Manuals and Policies
Schedule 3.06-4 Compensation
Schedule 3.07 Financial Statements
Schedule 3.08 Receivables
Schedule 3.09 Prepaid Expenses and Other
Schedule 3.10 Tangible Personal Property
Schedule 3.11 Payables
Schedule 3.12 Indebtedness
Schedule 3.13 Other Liabilities
Schedule 3.15 Leases
Schedule 3.16 Contracts
Schedule 3.19 Insurance
Schedule 3.25 Consents and Approvals
2.2 Stock Purchase Agreement, dated as of February 28, 1998, between
the Company and the sole shareholder of Managed Dental Care of
Oregon, Inc.
The following exhibits and schedules to the Stock Purchase
Agreement have been omitted and will be provided to the Securities
and Exchange Commission upon request:
Exhibit A Opinion of MDCO's Counsel
Exhibit B Opinion of GDSC's Counsel
Schedule 1.06 Purchase Price Allocation
Schedule 3.04 Litigation
Schedule 3.06-2 Employee Benefits
Schedule 3.06-3 Employment Manuals and Policies
Schedule 3.06-4 Compensation
Schedule 3.07 Financial Statements
Schedule 3.08 Receivables
Schedule 3.09 Prepaid Expenses and Other
Schedule 3.10 Tangible Personal Property
Schedule 3.11 Payables
Schedule 3.12 Indebtedness
Schedule 3.13 Other Liabilities
Schedule 3.15 Leases
Schedule 3.16 Contracts
Schedule 3.19 Insurance
Schedule 3.25 Consents and Approvals