FOR IMMEDIATE RELEASE
Contacts:
Donald J. Larson John K. Carlyle
President and Chief Executive Officer Chairman and Chief Executive Officer
CRA Managed Care, Inc. OccuSystems, Inc.
(617) 367-2163 (972) 484-2700
OCCUSYSTEMS AND CRA MANAGED CARE AGREE TO MERGE
BOSTON, Massachusetts and DALLAS, Texas (April 21, 1997) -- CRA Managed Care,
Inc. (Nasdaq/NM:CRAA) and OccuSystems, Inc. (Nasdaq/NM:OSYS) today jointly
announced that the two companies have agreed to a merger that will create the
nation's first fully integrated managed care company focused on workers'
compensation cost containment. The new company formed by this merger,
Concentra-Registered Trademark Managed Care, Inc., will provide preventive
services, first report of injury, primary care, specialist networks,
specialized cost containment services, and field case management for worker's
compensation as well as for the disability and automobile injury markets.
Concentra Managed Care will have operations in 49 states, the District of
Columbia, and Canada. The combined revenues for the year ended December 31,
1996, were approximately $350 million, and the two companies currently have a
combined market capitalization of approximately $800 million.
John K. Carlyle, Chairman and Chief Executive Officer of OccuSystems,
will become Chairman of Concentra Managed Care. Commenting on the
announcement, he said, "This union combines the considerable strengths and
capabilities of the industry's leading participants to form a company that is
well positioned to capitalize on the trends emerging in workers'
compensation. With complementary business models now to be joined into one
unified company, Concentra Managed Care will offer prospective and
retrospective services to employers and insurers of all sizes, and these
services will be especially appealing to those who seek broad geographic
coverage for a comprehensive solution to their workers' compensation needs in
multiple locations. As one company, we will be strongly positioned to
participate across the continuum of care, bringing a full solution to bear on
costs throughout the entire injury resolution process."
Donald J. Larson, presently President and Chief Executive Officer of
CRA, will be President and Chief Executive Officer of the new combined
company. He added, "By combining OccuSystems' network of affiliated
physicians with CRA's preferred provider organization, we
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CRAA and OSYS to Merge
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April 21, 1997
are creating a network of providers for workers' compensation that is
unparalleled in scope, national presence, and breadth of services. Because of
CRA's broad range of cost containment and case management services, this
merger positions Concentra Managed Care to meet a full spectrum of customer
needs in workers' compensation, including primary care clinical services and
preventive patient management. Furthermore, by enhancing our ability to
direct care and to take an outcomes-driven approach to managed care, the
merger with OccuSystems will provide additional opportunities for growth in
workers' compensation, and for continued expansion into other markets such as
disability claims and automobile injuries."
The merger has been structured as a tax-free stock-for-stock exchange to
be accounted for as a pooling of interests. The outstanding shares of both
companies will be exchanged for new shares in Concentra Managed Care on the
basis that each share of OccuSystems will equate to 0.56 shares of CRA.
OccuSystems' 21.6 million shares will be exchanged for 57.3% of the combined
company, while CRA's 9.0 million shares will be exchanged for 42.7% of
Concentra Managed Care.
In connection with the merger agreement, CRA and OccuSystems mutually
have granted each other an option to purchase up to 10% of each other's
common stock, exercisable upon termination of the merger agreement under
certain circumstances. In the event the merger is similarly terminated by
either company, CRA and OccuSystems also have agreed that the terminating
company will pay the other company a termination fee of $10 million.
Alex. Brown & Sons is serving as financial advisor to CRA and has
rendered a fairness opinion to CRA's Board of Directors with respect to the
proposed merger. Donaldson, Lufkin & Jenrette Securities Corporation is
serving as financial advisor to OccuSystems and has rendered a fairness
opinion to OccuSystems' Board of Directors. The merger agreement was
unanimously approved by both companies' Boards of Directors earlier today.
The merger remains subject to approval by the companies' stockholders,
and special meetings for this purpose are expected to be scheduled early in
the third quarter of 1997. The merger also is contingent on applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and
other customary conditions.
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CRAA and OSYS to Merge
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April 21, 1997
Concentra Managed Care will be headquartered in Boston. The Board of
Directors will consist of at least eight members, with CRA and OccuSystems
each nominating four directors. The new management team for Concentra Managed
Care will reflect a combination of the senior officers of the merging
companies. The company will maintain regional offices in Dallas for its
practice management services, development activities, legal services, and
certain other administrative functions.
CRA Managed Care provides managed care services designed to reduce the
costs associated with workers' compensation, automobile and disability
insurance claims. The company operates one of the largest field case
management organizations in North America, consisting of 119 offices with
approximately 1,200 field case managers who provide medical management and
return to work services in 49 states, Washington D.C., and Canada. CRA also
provides a broad range of specialized cost containment services from 78
service locations including utilization management, telephonic case
management and retrospective medical bill review.
OccuSystems is the nation's largest physician practice management
company focusing on occupational healthcare. OccuSystems provides the
management, facilities, administrative and technical support, injury
management, physical therapy services and other ancillary services necessary
to establish and maintain a fully integrated network of occupational
healthcare providers. OccuSystems currently manages the practices of 203
physicians in the company's 117 occupational healthcare centers located in 32
markets in 16 states.
Statements contained in this news release that are not based on
historical facts are forward-looking statements which are subject to
uncertainties and risks, including, but not limited to, the successful
completion of the herein described merger, demand for the companies' products
and services, economic and competitive conditions, the availability of other
appropriate acquisition candidates, access to borrowed or equity capital on
favorable terms, and other risks detailed in the companies' Securities and
Exchange Commission filings.
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