UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 6, 2005
HEALTHEXTRAS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-31014 52-2181356
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(State or other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800 King Farm Boulevard, Rockville, Maryland 20850
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(Address of principal executive offices)
(301) 548-2900
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-25(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
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On December 6, 2005, HealthExtras, Inc. ("HealthExtras") and its
wholly-owned subsidiary HCEM Corp. ("Acquisition Sub") entered into an Agreement
and Plan of Merger (the "Merger Agreement") with Managed Care of America, Inc.
("MCOA"), under which HealthExtras will acquire MCOA through the merger (the
"Merger") of Acquisition Sub with and into MCOA with MCOA as the surviving
entity. Under the terms of the Merger Agreement, shareholders of MCOA will
receive an aggregate of $28 million in cash, subject to adjustment at the
closing date, and up to $3 million of Contingent Additional Consideration. The
transaction is subject to receipt of MCOA shareholder approval, which was
obtained on December 7, 2005, the distribution by MCOA to its shareholders
discussed below and other usual and customary conditions.
MCOA's wholly-owned subsidiary, EBRx, Inc. ("EBRx"), which is a
provider of pharmacy benefit management services with a strategic focus on the
third party administrator market segment, represents the continuing business
operations of MCOA which will be acquired by HealthExtras. Prior to the Merger,
MCOA will distribute any other of its business operations and all of its other
subsidiaries to its stockholders through a pro rata distribution of stock of a
newly formed company.
On December 6, 2005, HealthExtras and Acquisition Sub also entered into
a Stock Purchase and Stockholders Agreement with Charles Davidson, Phyllis
Shehab and Jay Ver Hulst (collectively, the "Shareholders") and a newly formed
company, APS Benefits Corporation ("APS"), whereby the Shareholders will
purchase a minority interest in MCOA through APS. The Shareholders are key
members of the MCOA management team and will continue as a management team for
EBRx subsequent to the Merger. This minority investment in MCOA will help ensure
the ongoing continuity of the business of EBRx and promote its further
expansion. HealthExtras and the Shareholders each have certain rights, based on
subsequent performance of EBRx to purchase or require the repurchase, as the
case may be, of shares held by the Shareholders for amounts which vary based on
future performance of EBRx.
The Merger Agreement also contains usual and customary representations
and warranties that HealthExtras and MCOA made to each other as of specific
dates. The assertions embodied in those representations and warranties were made
solely for purposes of the contract between HealthExtras and MCOA, and may be
subject to important qualifications and limitations agreed to by the parties in
connection with negotiating its terms. Moreover, the representations and
warranties are subject to a contractual standard of materiality that may be
different from what may be viewed as material to shareholders, and the
representations and warranties may have been used for the purpose of allocating
risk between HealthExtras and MCOA rather than establishing matters as facts.
Public filings HealthExtras makes with the Securities and Exchange Commission
(the "SEC"), are available without charge at the SEC's web site at
http://www.sec.gov.
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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: December 12, 2005 By: /s/ Michael P. Donovan
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Michael P. Donovan
Chief Financial Officer and
Chief Accounting Officer
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